VAT hike? Lifestyle audits and emigration could resurge after 2020 Budget speech
CAPE TOWN – Finance Minister Tito Mboweni’s much-awaited 2020 National Budget speech has everyone anxious and for good reason as it could impact the property market, according to real estate agency Leadhome.
Potential changes include a hike in VAT to 16 percent, as well as an increase in Capital Gains Tax (CGT). This all impacts the residential property market, potentially compromising homeowners as costs increase constraining an already tight budget.
Lloyd Hobson, national sales manager of Leadhome, said on Wednesday prior to the Minister’s speech that while it all seemed doom and gloom, for buyers, these headwinds could create opportunity.
Hobson said a flat market created great opportunities for those looking to invest. “In this scenario, it is ideal for buyers to shop around and compare bond interest rate offerings as well as homeowner’s insurance.
“There is no need to simply accept what is offered by the banks, rather actively pursue good offers from several organisations. Buying in these circumstances does require a more long-term approach.” Hobson said there was no short-term gain from investing in property currently.
Hobson said he believed that a VAT and CGT increase might lead to further emigration or sales of homes because of the owners being in financial distress. “Many of the latter will most likely audit their lifestyle and seek ways to downsize and reduce expenses. This potential influx of properties could bode well for buyers, but for sellers, only homes priced right will sell.”
Hobson advises to list and sell, don’t wait to try to achieve an unrealistic price.
It would seem that no matter the economic circumstances, buyers are going to remain spoilt for choice, while the rest of the market grapples with another tough economic year.