Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

What SA's property industry leaders say about Budget 2019

21 Feb 2019

Amid an extremely tough economic environment, Finance Minister Tito Mboweni delivered his maiden Budget speech yesterday, with the welcome news of a R950 million subsidy for first-time home buyers, but on the downside, rising fuel levies and no tax relief for hard-pressed consumers.

Here’s what some of SA’s property industry leaders have to say:

‘No quick fix for SA’s Budget, but there’s some hope,’ says Dr Andrew Golding, chief executive of the Pam Golding Property group

“From a housing perspective, while the land expropriation issue is yet to be finalised and clarified, funding for the upgrading of informal settlements and the Our Help to Buy subsidy, a pilot project with R950 million over three years to help first-time home buyers acquire a home, are welcome news. Also noteworthy is the support for private sector investment in agriculture via support for emerging farmers.

“The Finance Minister also noted that there is a need to respond to rapid urbanisation by shifting from ‘horizontal’ development to vertical or ‘going up’, as part of an integrated development plan. This would suggest that government incentives may reinforce the shift towards the construction of more sectional title homes – a trend already evident in many of the country’s major metro housing markets.

“Overall, the Budget was more or less as expected; what we need now is to see South Africa embarking on a recovery path which will promote confidence and investment, which will have spin-offs for the economy and the housing market across all sectors.

“We would certainly have liked to see a reduction in the transfer duty which would have served to stimulate property transactions across the board – with the potential to increase volumes and thereby revenue generation for government. And we also hoped for budget policies and incentives to promote eco-friendly building incentives and budget incentives to enable quick and cost-effective building solutions to stimulate the lower end of the market.”

'Whether you’re planning to buy or sell property in 2019, it won’t be more expensive,' says Mike Greeff, CEO of Greeff Christies International Real Estate

"The South African property market can look forward to two major factors in the real estate industry remaining unchanged, which are transfer duties and capital gains tax. This means whether you’re planning to buy or sell property in 2019, it won’t be more expensive. The announcement to leave these factors unchanged is set to bolster the market ahead of the 2019 National Elections.

“Homeowners and those in the middle to lower income bracket who may be looking to buy in future are, however, expected to feel the pinch with an expected 29 to 30 cents increase on fuel levies, further increasing transport costs for hard-pressed taxpayers.

“On a much more welcome note, the decision by Treasury to create a special grant for first-time homeowners through its Our Help to Buy fund is sure to boost the South African property market and work in favour for all those looking to buy with a figure of R950 million set aside for the first three years.

“The property industry can expect to see significant growth as first-time homeowners will take full advantage of the grant.”

‘Consumers will no doubt be worse off for the year ahead,’ says Herschel Jawitz, CEO of Jawitz Properties

“The Budget shows just how little financial room the country has to manoeuvre, given the current economy and the state of our finances. Consumers will no doubt be worse off for the year ahead as a result of this Budget.

“With no tax bracket relief, many tax payers will end up paying more tax in addition to an increase in petrol and diesel prices as a result of an increase in fuel levies.

“With revenue collection under pressure, real change in the financial state of the country is going to come, more than ever, from the government’s ability to deliver on the commitments made by Minister Mboweni. These include fixing SARS, reducing the public sector wage bill and fixing the SOEs. The Minister has made all the right comments about fixing Eskom, however, time will tell how the government will implement the turnaround strategy in the face of political and union opposition.

“From a property point of view, there have been no changes to transfer duty or capital gains tax, however, the introduction of a pilot subsidy programme for first time buyers is very encouraging. While consumers will continue to face financial pressures as a result of the lack of tax relief, there should be no impact on an already subdued residential market.

“The real key to any meaningful improvement in the residential market will be consumer confidence. In terms of the Budget, this will be determined by the government’s ability to deliver on keeping the lights on, reducing corruption and focusing on the key components needed to create a growing economy for the benefit of all South Africans. Consumer confidence can turn quickly if the public sees positive signs of improvement. We should be encouraged by what we have heard today.”

‘Measured and in the best interest of the country right now,’ says Samuel Seeff, chairman of the Seeff Property Group

“While disappointed that there has been no relief for the property sector or for consumers, the budget was largely as expected by the market.

“We expected a bail-out package for Eskom as part of the Budget, and in view of this, are encouraged that this is not in the form of higher direct personal or property taxes, although not adjusting the tax brackets will inevitably still cost consumers.

“The property market has had to absorb the effects of higher taxes along with cost hikes in recent years which has manifested in lower transaction volumes and the value of transactions in the upper price bands. Additionally, the market is feeling the effect of concern about land security and the general outlook for the country going forward.

“What does this mean for the property market? While there are many positives, Seeff says the reality remains a fairly weak outlook for the economy with the finance minister adjusting the GDP growth outlook for the year to 1.5%. On the back of this, the property market will remain flat, characterised largely by sideways movement.

“That means that those that ‘need to buy or sell’, largely below R1.5 million (up to R3 million in some areas) will continue to transact in line with their needs. The favourable interest and bank lending climate means you can sell within a reasonable timeframe in this sector.

“Above this, you find the discretionary market, i.e. those who do not necessarily have to transact. They are subject to the higher transfer duty instituted in 2016 as well as Capital Gains Tax (CGT) and rather than paying over millions that add no value, are simply sitting on the fence waiting and watching how things unfold.

“The Seeff group however, remains buoyed by the commitment of President Ramaphosa to reform the current state of affairs and administration, deal with corruption and maladministration and boost renewed economic growth. As the finance minister said, it is important to realise that there is no quick fix, recovery will be gradual.

“The subdued price growth and positive lending landscape mean that if you are looking to find a good buying opportunity, then you may well find it in this market. Although it may be riskier now, you could ultimately see greater return.”

‘Government in favour of private property ownership,’ says BetterBond CEO, Rudi Botha

“The most exciting aspect of today’s Budget announcement for us was the clear indication from Finance Minister Tito Mboweni that the government is in favour of private property ownership – despite the ongoing concerns around a constitutional change that would more easily enable land expropriation without compensation.

“Indeed, in support of private ownership, the Budget specifically allocates R3.7 billion over the next three years to assist emerging farmers who wish to purchase land – and introduces the new Help-to-Buy subsidy for first-time home buyers, which has been allocated R950 million.

“We wholeheartedly support these moves as well as the news that R14.7 billion of funding has been brought forward for two new grants to assist in the upgrading of informal settlements to ensure that residents are provided with basic services. This will go a long way to improve the basic living conditions of millions of people.”

“As a whole, he says, the Budget should be rated a success in that it at least addressed all the other major issues that have been weighing on the minds of both SA and foreign investors as well as local consumers, the biggest of these being Eskom’s R400 billion debt and it’s deteriorating capacity to provide the power that SA needs to grow.

“Taxpayers will be relieved to know that they are not going to foot the bill for this entire debt – and also that they will not be facing any further VAT or income tax increases this year, although an increase in the fuel levy will no doubt push up the cost of transport and household purchases.

“Meanwhile, we are encouraged by the Minister’s acknowledgement that the private sector is the key engine for both economic growth and job creation, and his plans to increase public-private partnerships in  infrastructure development projects and to provide further support for the Jobs Fund, Employment Tax Incentive Scheme, Small Enterprise Development Agency and industrial business incentives. These initiatives have the potential to generate significant employment growth – and the expansion of SA’s real estate market - over the next three years.”

Print Print
Top Articles
With apartments from R500k and houses from R1m, Gordons Bay in the Western Cape offers excellent investment opportunities, a seaside lifestyle and so much more...

Are you dreaming of a gorgeous home in a warm area with scenic views and lavish finishes? These estate homes in KwaZulu-Natal’s Ballito tick all the boxes…

South Africans love the countryside and well-priced farms in the Cape always appeal to buyers looking to escape the city. From Riversdale to Gansbaai and Swellendam...

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724