It was disappointing that consideration was not given in Finance Minister Pravin Gordhan's budget speech to the reduction in transfer duty as a means of assisting aspiring homeowners.

So said Dr Andrew Golding, CE of Pam Golding Properties (PGP), who added that “it is regretted that an increase in the transfer duty threshold – which currently stands at R500k – did not materialise. This would have had the effect of considerably contributing towards making home ownership more affordable and within the reach of consumers, particularly first-time buyers.”

However, the increase of 11,6% over the next three years allocated to the housing department is welcomed, as this will provide assistance to the lower end of the market.

“The reduction in personal income tax was also a positive note, although it is of concern that the minister indicated this may increase next year, given that South Africans already pay a relatively high rate of income tax.”

Golding said on the back of a recovering economy and given the anticipated reduction in job losses, we remain optimistic in terms of South Africa’s economy and potential for growth, and the positive impact this will have on the country’s housing market.

Jacques du Toit, property strategist at Absa, said it was not really widely expected that transfer duties would be lowered, due to the fact that property prices were relatively flat and in some instance even dropped over the past year. “So there was not really a major influence on transfer duties payable as a result of rising property prices.”

Peter Gilmour, chairman and regional owner of RE/MAX of Southern Africa, said Gordhan's announcement of relief to homebuyers was to be applauded.

However, he said government's efforts to assist South Africans to access home loans needed to be taken further.

RE/MAX noted Gordhan's announcement in his maiden budget speech that government would co-operate to find ways to address a key gap in the housing market, with middle-income earners not able to access financing to buy homes.

It follows the announcement by President Jacob Zuma in his State of the Nation address last week, that a guarantee fund of R1bn would be set up to incentivise the private banking and housing sector to develop new products to meet the massive demand for formal housing, the group said.

"Whatever measures that government introduces, that are positive in nature and assist people to afford to buy their own home, are important and should be supported," said Gilmour.

"It is encouraging to see that government is taking a step in the right direction in terms of assisting South Africans to access home loans, but I think that this probably needs to be taken further than what is currently envisaged.

"For example, the $8k tax subsidy that the US government recently introduced has strongly encouraged house-buying in that country over the past nine months, accounting for between 30-40% of house purchases. This has had a significantly beneficial effect, putting the US economy on the road to recovery," Gilmour said.

In addition, Gordhan announced that the global financial crisis showed the need for central banks to take a broader view of the economy in managing inflation, and for the SA Reserve Bank to be more flexible regarding inflation-targeting, to keep interest rates stable, RE/MAX said.

"This move, too, should be supported," said Gilmour.

"With less volatility in interest rates, the housing market becomes more stable and homeowners are more easily able to service their mortgage debt over the long-term."

Gerhard Kotzé, CEO of the ERA South Africa property group, echoed Golding’s view that the budget was a disappointment. “The Budget was disappointing, given what's happening to stimulate property markets globally and taking into account property's generous contribution to our overall GDP," he says.

Kotzé says there are indeed flickering signs of improvement in the property sector, but that the Budget should have been used as the platform to nurture and expand that recovery beyond the announcement that Government would work with banks to find ways to help more middle-income people to access home loans.

"The recovery needed to be kick started. The latest Absa House price index for example shows that the upward trend in nominal house price growth evident since the middle of 2009 continued in January, although real (after inflation) prices continued to decline up to December last year.

"And the FNB House Price Index shows that the average house price declined by 3,9% in 2009, although there was an improving trend towards the end of the year.

Taking a leaf out of the book of overseas markets, Kotzé says the Minister could have introduced a broad tax incentive for homebuyers, established greater clarity on interest rates and introduced improved investment incentives for developers.

"House price affordability is the key and in the UK, because of various incentives, someone with average earnings can now afford to buy their first house in 21% of local authority areas, up 15% on last year, and the house price-to-earnings ratio is at its lowest level in more than six years, making it easier to get on to the property ladder.

"In addition, the amount of disposable income needed by first-time buyers to cover mortgage repayments has dropped from its peak of 48% to about 31%, a far cry from the prevailing situation in South Africa."

Tjaart van der Walt, CEO of the RealNet estate agency group, says the R1bn allocated to speeding up housing provision is disappointing.

"This figure is but a drop in the ocean. A large percentage of South Africans have low incomes and need help to gain secure tenure. Not only is it a basic human right, but large-scale housing incentives will create many jobs, which in turn, will contribute significantly to reducing unacceptable crime levels.

"Emphasis on rural development is to be welcomed but government can speed up housing delivery in these areas by making large tracts of state land available to developers free of charge.

The most positive aspect of the Budget is the news that spending on infrastructure elements such as electricity supply, roads and water systems will continue for many years after the Soccer World Cup, says Harcourts Africa GM Jeanne van Jaarsveldt.

"Although the people visiting the country will primarily be coming to watch sport and not to look for property or business opportunities, it does present us with a fantastic chance to showcase SA - and to persuade many people to return over the next two or three years to invest here. It is thus very important that they should see continued development and upgrading. – Eugene Brink and I-Net Bridge

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