So we have put together comments from estate agents around South Africa after the new national budget for 2018 has been released and how it can impact homeowners as well as the property market in general.
Recently South Africa has suffered from the lack of investments however the government hopes to restore confidence for such investors and gain back the global credibility which South Africa once had.
Start off with Dr. Andrew Golding who is the CEO of Pam Golding Property Group:
“Speaking from a property perspective, this is a market which is fuelled by sentiment, and as a consequence, a Budget which satisfies the above criteria – on the back of the election of President Ramaphosa – is expected to go a long way towards reaffirming investor confidence in real estate.
“South Africans continue to demonstrate an increasing appetite for homeownership which is to be encouraged as it helps provide security of tenure and financial security for the future.”
He also goes on to say how the budget speech proposes over 190,000 government-owned homes which will cost R40 billion this could very well unlock revenue and opportunity for property development but also redevelopment.
“And while we await further detail, the commitment to drive both urban and township development and stimulate faster and more inclusive growth augurs well for infrastructural investment and the facilitation and expansion of economic hubs, especially along key transport corridors.
“Also positive is the allocation of R6 billion for purposes which include drought relief and to augment public infrastructure investment.”
“While the increase in VAT from 14% to 15% is unpalatable and erodes consumer disposable income – particularly among lower income earners, it was anticipated and is hoped will go a long way towards offsetting the Budget deficit. Welcome news for lower and middle-income earners is the adjustment of the bottom three personal income tax brackets for inflation.
“It is true, however, that the 52c a litre increase in levies on fuel will impact across the economy, as rising transport costs have an inflationary, ripple effect.
“While growth forecasts for our economy appear increasingly positive, it will become evident in the coming days and weeks as to how the credit ratings agencies will respond to the Budget.”
“Overall it was a far more balanced budget speech than initially expected, with a focus on rebuilding, which is in line with the newly elected President Cyril Ramaphosa’s messaging. However, Finance Minister Gigaba’s announcement that there will be an increase in VAT from 14% to 15%, the first time VAT has been increased since 1993, will undoubtedly have a direct impact on the property market. VAT is payable on the transaction of a home purchase and in some cases included in the price of the home. Although one percent seems like a very slight increase, transactions like high value commercial properties or development investments might feel the increase far more than that of the middle to lower end of the market.
“There is no doubt Government is experiencing shortfalls in their budget and lending might tighten up, therefore accumulation of funds has to originate from taxes.
“South Africans experiencing a price pinch with rising food costs, fuel costs and tax hikes might continue to be under financial pressure as more increases can be expected. This was noted in the speech as a 22c/litre increase in the general fuel levy, and a 30c/litre rise in the Road Accident Fund (RAF) levy was announced.
“South Africans will also be paying 52 cents more per litre for fuel from April 4. The effect of these tax hikes impacts the man on the street in a direct manner, and this might have an effect on the rental market on the lower end.”