Godongwana’s letter to CoJ sparks fears around property valuations

Some property groups appear to be getting jittery about property value in the City of Johannesburg (CoJ) amid concerns about the metro’s poor financial health and governance crisis.

The latest cracks in the city were made bare this week after another warning from Finance Minister Enoch Godongwana threatening to cut state funding to SA’s largest metro, unless a R10.3 billion wage agreement with municipal workers is scrapped.

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This is the second time Godongwana has threatened to take the city to task over the handling of its finances and governance matters, referring to a “series of violations of various legislative and regulatory compliance requirements under the Municipal Finance Management Act”.

Berry Everitt, CEO of the Chas Everitt International property group says the worsening financial crisis facing the city of Johannesburg has become a matter of national concern that should rise above party politics, labour disputes or electioneering, calling for restraint, responsibility and a clear focus on protecting the metro’s economic future.

Otherwise, Everitt warns it runs the risk of stirring up uncertainty among investors, businesses, property owners and residents alike – at a time when the city can least afford a loss of confidence.

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“This is clearly a volatile situation, especially in the light of the looming municipal elections, but at this point, the most important thing is for everyone involved to keep a cool head and do what is best for the city and South Africa as a whole,” he says.

SA’s economic hub

“Johannesburg is not just another municipality. It is the economic engine room of South Africa and a major gateway for foreign investment into the country. If confidence in the city collapses, the effects will be felt throughout the national economy,” he warns.

Everitt says prolonged instability, service delivery failures, financial uncertainty and the threat of disruptive protest action will seriously undermine Johannesburg’s attractiveness as a place to live, work and invest.

“And the consequences for the residential and commercial property markets could also be severe, because property values are essentially are built on confidence,” he adds.

“People invest in homes, developments and businesses when they believe a city has a stable future, functioning infrastructure and credible financial management. If that confidence is lost, property values can stagnate or even decline, which ultimately would harm every homeowner, investor and business in the metro.”

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Read/listen:
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Joburg needs the finest people to lead the city – Malose Kekana [June 2023]
Sapoa: Spiralling municipal rates represent ‘catastrophic value destruction’ [May 2021]

It could also ultimately mean lower rates for CoJ.

Johannesburg mayor Dada Morero is expected to meet with Godongwana soon and has moved to assure residents and investors that there is no cause for concern.

“The city administration remains fully operational and continues to exercise effective oversight and control over the municipality’s financial and governance responsibilities,” Morero says.

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