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'Estate agents focus on rich, foreigners'

Johannesburg - The misallocation of finance to speculative activities in real estate has negatively affected the South African economy, Trade and Industry Minister Rob Davies said on Tuesday.

"It has left us less able to respond rapidly to the global financial crisis, because we have lost ground in industry and productive sectors," Davies said in a speech prepared for delivery to estate agents in Johannesburg.

Finances had also been misallocated to financial transactions involving extension of high levels of credit, he said.

The National Credit Act had been introduced because of the government's concern that financial institutions, including banks and micro-lenders, were entering into abusive credit relationships with their clients.

Davies said banks, and to some extent estate agents, had to reflect on their responsibilities.

"Today we hear from the national credit regulator that over 45 percent of credit active South Africans (10 million people) are three months or more behind on their debt repayments.

"New times need new approaches," he said.

Davies also challenged estate agents to find ways of contributing to the collective effort to address the "structural imbalances inherited as a result of the past".

"For instance, there remain far too many South Africans without decent shelter. What is the potential role of estate agents' associations in helping government deal with provision of decent housing for the poor?" he asked.

"Is your primary role and business model one that focuses only on selling expensive houses to higher income and foreign buyers?"

The government supported the opening of the South African market to foreign buyers, but real estate foreign direct investment was of much lower priority to the country than productive sectors.

"Investments in productive sectors will create jobs, whereas investments that will cause our land to be sold off and may even promote speculative bubbles in real estate prices are clearly unattractive in terms of the current needs and growth trajectory of our economy."

Davies further challenged the industry to look at the demographic composition of real estate professionals and examine whether it was becoming more representative of the country's demographics.

- Sapa 

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