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Budget 2017: Here’s how the industry reacted

shutterstock_99681413 (1)The property industry unanimously reacted positively to the 20% increase in the threshold for the payment of transfer duty from R750,000 to R900,000 effective 1 March. Experts believe that, not only will this benefit the market due to increased capacity of first-time buyers, it will also stimulate the repeat-buyers’ market as well as being positive for those individuals needing to scale down.

There is concern, however, around the super tax being imposed on South Africans earning more than R1,5m. These tax payers will now pay a rate of 45% personal income tax, previously the top bracket was 41% at R701,301. What compounds the burden on South African consumers is the fact that the relief on the other end of the income spectrum has been limited with the tax-free threshold only increasing by R750 from R75,000 to R75,750. Adding to the burden of consumers across the board is the increase of 30c/litre in the general fuel levy and 9c/litre in the road accident fund levy.

This is what experts predict it means for the marketshutterstock_574226941

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa

“The annual allowance for tax free savings accounts being increased to R33,000 should encourage people to put money aside for housing deposits and other costs associated with purchasing a home. South Africa is known for having a poor savings culture, so any assistance from the government to encourage people to save is most welcome.”


Gerhard Kotze, MD of the RealNet estate agency group

“We 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 spinoffs not only in terms of property demand but in terms of tourism, enterprise development and job creation. We also 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.”


Berry Everitt, CEO of the Chas Everitt International property group

“We were pleased to note that there is to be no increase for now in Capital Gains Tax, which might have proved a deterrent to the buy-to-let investors we see coming back into the market now as the growth in the number of households accelerates and the demand for rental homes continue to rise.”


Andrew Golding, chief executive of the Pam Golding Property group

“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.”


Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty

“Minister Gordhan uttered the word ‘transformation’ more than 50 times in his 29-page speech. He is not wrong that transformation is needed in South Africa, but not at the expense of the tax-payers on whose backs the economy is built. With an unemployment rate of more than 26% in the last quarter of 2016 businesses, big and small, need all the help they can get from the government right now, and in this budget they were largely ignored. That’s bad business for the economy, for consumers and for home-owners.”


Samuel Seeff, chairman of the Seeff property group

“Burdening wealthy citizens with higher tax may potentially also take the liquidity out of the top end of the property market. As we have seen over the last year, the higher transfer duty and Capital Gains Tax impacted sales negatively. The negative sentiment also meant that despite a weak rand, fewer foreigners bought property despite the fact that we welcomed record numbers of foreign visitors over the summer”


Herschel Jawitz CEO of Jawitz Properties

“As expected, there are no further changes in the higher thresholds or transfer duty percentages and no change to the R2m exemption on Capital Gains Tax for a primary residence. However, the maximum rate of Capital Gains Tax for individuals and other trusts has increased to 18% and 36% respectively. This is in line with a trend from Treasury to discourage ownership of property and other assets in a trust.”


Harry Nicolaides, Century 21 CEO

“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.”


Bruce Swain, MD of Leapfrog Property Group

“I applaude 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 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.”


Crispin Inglis, co-founder of PropertyFox

“South Africa is one of the most expensive countries in the world in which to buy or sell property. A person buying a home for R2,5m can expect to pay upwards of R180,000 in fees and transfer duties and one selling a home for the same value can expect to pay more than R200,000 in fees. The impact on the property market as a whole should be a good one.”

ungerermariette@gmail.com

Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart. Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.

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