Gerhard Kotze, MD of the RealNet estate agency group, says the Budget delivered today is extremely positive and encouraging for the real estate industry, apart from the hefty increases in the fuel and road accident fund levies, which will increase household transport costs.
“From our point of view, there will be an immediate benefit from the increase in the Transfer Duty threshold to R900 000. This will be a huge relief not only to first-time buyers but also to many existing owners who are down scaling now from large homes to smaller ones in order to reduce their expenditure on maintenance, rates and utilities such as water and electricity. The new threshold will enable many of these buyers to use all the equity built up in their existing homes as a deposit on their new home instead of having to divert some of it to transfer duty. This in turn will mean that they are able to reduce their monthly bond installments and use the difference to pay off debt or save more”.
“Meanwhile 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.”
Other positive aspects of the Budget for real estate, he says, include the fact that there was neither a VAT increase nor an across-the-board increase in personal taxes and that there was no increase in the Capital Gains Tax rate which would have acted as a deterrent to property investors.
“We also appreciate the renewed focus on the redevelopment and improvement of urban infrastructures including roads, water reticulation networks and public transport. If these plans can be implemented as envisaged, it will raise living standards in our cities and towns and have major spin offs not only in terms of property demand but in terms of tourism, enterprise development and job creation”.
“And finally, we applaud the fact that the Minister was able in these difficult times to find an additional R600m for the social housing authority to provide affordable rental housing for poor people close to employment opportunities in the inner cities.”