Residential News

Some relief for first time home buyers in National Budget

The raising of the threshold for transfer duty on properties sold for less than R900 000, up from R750 000, as announced in today’s National Budget, is positive news as it provides some relief for first time home buyers, says Andrew Golding, chief executive of the Pam Golding Property group.

“This aspirant sector of the market is a key driver of South Africa’s residential property market, solidly underpinning activity, particularly in metropolitan hubs which increasingly draw a younger generation of home buyers wanting accommodation close to the workplace.

“Also welcome is the increased investment in infrastructure and transport networks as well as in integrated urban development projects and township precincts, as this helps provide a catalyst for growth in the housing market.”

Golding says further positive aspects of the Budget include a concerted focus on education as well as tourism promotion.

“However, the hefty increase in fuel taxes is of concern as this will create an inflationary ripple effect across the economy. The 39c a litre hike, comprising an additional 30c in the fuel levy and 9c in the RAF levy, will mainly hurt the pockets of lower and middle income citizens, who are already contending with ever-rising electricity and water tariffs as well as property rates and food prices.

“Furthermore, South Africans are faced with a double-whammy as the zero-rating of VAT on fuel is to be removed in the 2018/19 financial year, which in effect constitutes a double taxation on fuel.

“As a result we anticipate this will further boost the demand for residential property both to acquire and to rent among those seeking to reduce transport costs and avoid traffic congestion, again driving the need for homes within easy reach of places of employment and all amenities. This presents an opportunity for developers to look to cater for this market, and may well give rise to further sectional title projects being launched in strategic locations.

“While we welcome the fact that VAT has not been increased, the increase of 30c per litre of fuel will increase the cost of goods and services across the board. This will lower the amount of household disposable income, but over all the current property market in the Western Cape is not going to experience any significant jitters,” says Mike Greeff, CEO of Greeff Christie’s International Real Estate.

“We welcome the relief provided in the affordable housing market through the increase in the threshold above which transfer duty is paid, from R750 000 to R 900 000. This will help to facilitate successful applications for home loans and will mean that house price growth will not be hampered,” says Greeff. “I believe that the positive initiatives to redistribute funds to the neediest communities and improve basic infrastructure, education and training across the board can only lead to a healthier state of economy for all, and as employed individuals we can all make a positive and meaningful contribution to South Africa’s future,” adds Greeff.  “The wealthy will definitely bear the major brunt with the increase in personal tax to 45% above an income of R1.5 million, but I believe demand for mid priced to luxury property in the Western Cape will not decline,” concludes Greeff.