Budget hailed as boon for property market
Pam Golding Properties chief executive Dr Andrew Golding said the fact that no major tax increases, or even personal income tax relief across the board, was announced by Finance Minister Tito Mboweni, with the bulk of relief going to taxpayers earning less than R500 000 a year, was good news for the property market.
A further adjustment in the transfer duty threshold was also a welcome move, he said. The threshold for transfer duty with zero duty payable was raised to R1 million or less, from R900 000.
Many of the primary beneficiaries of the Budget would be first-time home owners, he said.
First-time buyers account for about half of all mortgages currently facilitated by ooba, but affordability had tended to dampen potential demand.
“The 2020 Budget goes some way towards addressing this, by lifting the transfer threshold. The average price paid for a home by a first-time buyer broke the R1m barrier for the first time ever, at the beginning of the year - at R1 001 275 in January 2020,” Golding said.
The increase in the transfer duty threshold would not only stimulate first-time home buyers but also others seeking affordably priced homes - a key segment of buyers in the current market.
On the increase in fuel levies, Golding said: “”As we’ve seen in recent years, and a trend which will continue, is that rising fuel costs further propel buyers towards conveniently located, hassle-free living in major centres and key nodes close to the workplace and all amenities, including schools, with the added benefits of avoiding heavy traffic congestion and time wastage.”
He said that cash-strapped, budget-conscious consumers will be looking to reduce monthly costs wherever possible.
“We’re going to see an ever-increasing trend towards energy-saving features as more and more homeowners - including entire residential estates and developments - endeavour to reduce their reliance on Eskom and even go completely off the grid,” he said.
Seeff Property Group chairperson Samuel Seeff also welcomed the personal tax relief and the raising of the transfer duty threshold.
“This should boost first time buyers and the low to mid-market sector to about R1.8 million which is the most active segment of the market, supported by the favourable mortgage granting climate.”
Seeff also welcomed the plans by government to lower the corporate tax rate and said he hoped that a lowering of Capital Gains Tax (CGT) and high end property transfer duty rates would also be considered to reignite the property market.
Seeff said that the market for property sellers would remain tight due to the weak economy.
But he expected there would be an increase in buyers as they adjusted to the “new normal” for the economy and market,
“It is easier to obtain mortgage loans and the banks are granting higher bonds, especially for first time buyers. There is now more stock to choose from and generally, sellers have become more negotiable,” said Seeff.
Greeff Christie’s International Real Estate chief executive Mike Greeff said the finance minister also pointed out the growth in employment due to the Job Fund projects. To date, the fund had created more than 175 000 permanent jobs for the youth and helped 21 000 young people get internships.
Greeff said: “This is a huge positive for the property sector because as young people become financially independent, more and more young adults will be able to qualify for home loans and in turn, become property owners.”
Greeff said the pilot of the Help to Buy scheme had supported over 2000 families to buy their own homes. Last year the Help to Buy scheme had supported nearly R1bn in new lending.