“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.
Harry Nicolaides, Century 21 CEO, reckons “it could serve as a catalyst for consumers who wish to sell their property below R900 000 who then go on to buy more expensive properties.
Bruce Swain, MD of Leapfrog Property Group applauds both Minister Gordhan and Minister Sisulu for appealing to home owners, especially in the lower end of the property market, to hold on to their homes for longer. “A house is an asset that can be used to generate real wealth – not just by eventually selling it for a good price, but to by using it as collateral to fund a child’s education for example. This is responsible advice that ought to be applied by all South African home owners”.
Gerhard Kotze, MD of the RealNet estate agency group, says: “The change will lower the amount of cash that first-time buyers need to cover a deposit plus transaction costs, and that will definitely make it easier for them to acquire their own homes sooner rather than later. On a home priced at R900 000, the cash amount required for transaction costs will now decrease from almost R40 000 to approximately R25 000 – and being able to put the difference towards the deposit will definitely bring forward the purchase date.”
Dr Golding also welcomes 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. “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.
“Despite the constrained economic outlook and the message by the Minister of fiscal prudence, the South African property market outlook for 2017 is cautiously optimistic, with steady or stable house price growth, relatively low interest rates, favourable inflation outlook and careful confidence by lenders. The relaxation in the transfer duty rates will therefore act as further stimulus for the property market,” concludes Nicolaides.
Herschel Jawitz CEO of Jawitz Properties notes that the increase in the withholding tax on non-residents’ disposal of property from 5% to 7.5% would have little impact on the demand for property by non-residents. "The overall budget is as expected with very little tax income tax relief and a higher tax burden for high income earners with the introduction of a new marginal tax rate of 45% above R1. 5 million and a significant increase in dividend withholding tax by 33% to 20%." adds Jawitz.