Industry experts hopeful changes will lead to a more buoyant property market
The Budget speech is always highly anticipated. This year, it contained more good news than bad for the property market.
The announcement of no change in capital gains tax or the transfer duty threshold was received with relief by property professionals, and a plan to reshape the public service and curb government spending is also expected to have a positive knock-on effect on the property market. Berry Everitt, CEO, Chas Everitt, says, “It will hopefully stave off a ratings downgrade to total junk, help to attract more private sector investment and boost the employment rate even faster.” More jobs will lead to more sales and rentals, and rising investor confidence will go far to check inflation and make it easier for more people to qualify for home loans and buy their own homes.
Much has been made of the VAT increase from 14% to 15% and reactions about how this will affect the property sector are mixed, with concern mainly over commercial and development business. “Although 1% seems like a very slight increase, transactions like high-value commercial properties, where one of the parties is registered for VAT, or new development investments, might feel the increase far more than those of the middle to lower end of the market,” says Richard Gray, CEO, Harcourts South Africa.
After a slow end to 2017, when many people seemed to be adopting a wait-and-see approach rather than engaging in selling or buying a new home, 2018 has already seen an upswing in business.
“We’re witnessing the rapid re-emergence of a pattern of upgrading in the middle-income market that has been missing for several years,” says Everitt. “Instead of trying to downsize, an increasing number of repeat buyers are now seeking to move to bigger and better homes.”
Jonathan Davies, regional director, Tyson Properties Gauteng, says the Budget seems to have encouraged this general shift in sentiment. “I’m hopeful that it will translate to a more buoyant property market. Having said this, the Budget is not the only component of a sustained property growth phase, and without application and implementation of good governance and growth, the resultant property knock-on effect could be limited. Interest rates are low, but without sound fundamentals, we could be in for an average property market and a sustained building of confidence as the economy hopefully recovers.”