Finance Minister Tito Mboweni made his debut National Budget speech in Parliament yesterday. Here’s what the property experts have to say about what this means for real estate, South Africa and you.
Adrian Goslett - Regional Director and CEO of RE/MAX of Southern Africa
There were enough positive outcomes within the speech to instil a hopeful confidence in the years ahead. As Minister Tito Mboweni himself stated, this is a budget for the future – one in which a seed for renewal and growth has only just been planted
“That being said, more could have been done in order to stimulate the property market. There were no mentions of any changes in transfer duty rates and capital gains tax – a drop in these figures would have translated into higher returns for property investors which could have stimulated the market and encouraged economic growth.”
All things considered, Goslett believes that the National Budget Speech sets us up for a year exactly as the Minister of Finance framed it: a resilient, drought-resistant aloe that will survive harsh external factors.
Rudi Botha - CEO of SA’s leading bond originator BetterBond
“The most exciting aspect of today’s Budget announcement for us was the clear indication from Finance Minister Tito Mboweni that the government is in favour of private property ownership – despite the ongoing concerns around a constitutional change that would more easily enable land expropriation without compensation.
Indeed, in support of private ownership, the Budget specifically allocates R3,7bn over the next three years to assist emerging farmers who wish to purchase land – and introduces the new Help-to-Buy subsidy for first-time homebuyers, which has been allocated R950m.
"As a whole, he says, the Budget should be rated a success in that it at least addressed all the other major issues that have been weighing on the minds of both SA and foreign investors as well as local consumers, the biggest of these being Eskom’s R400bn debt and it’s deteriorating capacity to provide the power that SA needs to grow."
Richard Gray - CEO of Harcourts Africa
"We know that in order for South Africa to achieve positive economic growth Government is going to have to be tougher on state-owned enterprises. This was a central theme for the Minster and he was very clear about the effect these SOE's have on our economy."
"What was reassuring was the Minister's clear focus on rebuilding a stagnating economy. "It is all of our duty to tend the seed and see that it grows strong, tall and fruitful. It is a budget for the future,” he explained."
"If we can see the Minster and the Department stand strong on its desire to clamp down on SOE lending as well as aim to reduce pressure on the consumer, the economy will undoubtedly start to gain ground and we will be able to restore both consumer and investor confidence which in turn translates into increased economic activity."
Berry Everitt - CEO of the Chas Everitt International property group
“Given the current state of SA’s economy, we are not surprised that there was no specific relief for property buyers in today’s Budget in the form of a Transfer Duty reduction or even an increase in the threshold. But we believe consumers will breathe a sigh of relief at the news that there will be no VAT or personal income tax increases this year, especially since they are facing another increase in the fuel levy and higher electricity costs.
“In addition, we applaud Finance Minister Tito Mboweni and Public Enterprises Minister Pravin Gordhan for coming up with a creative solution to ensure that SA taxpayers don’t have to pay off Eskom’s entire R400bn debt. As the public, we will hopefully only have to foot the bill of R23bn a year for the next three years to ensure that Eskom reconfigures itself - under tight supervision – and is then able to pay off its own debt."
"Such issues may not seem relevant to real estate, but they are very much so, in the sense that the real estate market can only thrive in a climate of growing confidence among investors, rising economic growth and increasing employment."
Gerhard Kotzé - MD of the RealNet estate agency group
“According to today’s Budget announcement, SA can look forward to a lot more high-rise housing developments in and around its major metros as part of government’s integrated strategy to prepare for the future and provide affordable accommodation for a rapidly urbanizing population.
“This is exciting news as it has the potential to bring thousands of people within easier reach of the jobs and amenities that urban centres offer, while saving on transport and making better use of existing infrastructure and services. It will also be much easier and more cost effective for government and its private sector partners to upgrade and densify existing water, power, communications and public transport networks than to lay miles of new pipelines, roads and cables."
"Even though this was a relatively sombre Budget, we would say that it is likely to prove positive for the real estate sector in the longer-term. In the interim, the good news is that lower inflation means that there is less likelihood of an interest increase next month.”
Herschel Jawitz - CEO of Jawitz Properties
"From a property point of view, there have been no changes to transfer duty or capital gains tax, however, the introduction of a pilot subsidy programme for first time buyers is very encouraging. While consumers will continue to face financial pressures as a result of the lack of tax relief, there should be no impact on an already subdued residential market."
"The real key to any meaningful improvement in the residential market will be consumer confidence. In terms of the Budget, this will be determined by the government’s ability to deliver on keeping the lights on, reducing corruption and focusing on the key components needed to create a growing economy for the benefit of all South Africans. Consumer confidence can turn quickly if the public sees positive signs of improvement. We should be encouraged by what we have heard today."
Samuel Seeff, chairman of the Seeff Property Group
Seeff views the budget as measured and in the best interest of the country right now. While disappointed that there has been no relief for the property sector or for consumers, the budget was largely as expected by the market, he says.
"What does this mean for the property market? While there are many positives, Seeff says the reality remains a fairly weak outlook for the economy with the finance minister adjusting the GDP growth outlook for the year to 1,5%. On the back of this, the property market will remain flat, characterised largely by sideways movement."
"That means that those that “need to buy or sell”, largely below R1.5 million (up to R3 million in some areas) will continue to transact in line with their needs. The favourable interest and bank lending climate means you can sell within a reasonable timeframe in this sector."
"Above this, you find the discretionary market, i.e. those who do not necessarily have to transact. They are subject to the higher transfer duty instituted in 2016 as well as Capital Gains Tax (CGT) and rather than paying over millions that add no value, are simply sitting on the fence waiting and watching how things unfold."
The subdued price growth and positive lending landscape mean that if you are looking to find a good buying opportunity, then you may well find it in this market. Although it may be riskier now, you could ultimately see greater return.
Dr Andrew Golding - chief executive of the Pam Golding Property group
"A clear thread running through the Budget Speech was a need to focus on improving education and boosting skills development and training, which is a solid foundation on which to build a stronger economy while fostering job creation, as well as a welcome move to meaningfully involve the private sector in various initiatives."
"Consumers will be relieved that personal income tax rates have not been increased. However, minor increases in tax thresholds and tax rebates for individuals will not fully offset fiscal drag, thereby keeping household finances under pressure. With various measures being implemented to revive SARS capabilities it is hoped that this will ultimately help generate more revenue than further tax increases would."
"From a housing perspective, while the land expropriation issue is yet to be finalised and clarified, funding for the upgrading of informal settlements and the Our Help to Buy subsidy, a pilot project with R950 million over three years to help first-time home buyers acquire a home are welcome news. Also noteworthy is the support for private sector investment in agriculture via support for emerging farmers."
"Overall, the Budget was more or less as expected; what we need now is to see South Africa embarking on a recovery path which will promote confidence and investment, which will have spin-offs for the economy and the housing market across all sectors."
