THE NEWS IS GOOD FOR MOST SOUTH AFRICANS
Category Advice
South Africans held their proverbial breath as our braveheart Minister of Finance, Pravin Gordhan, rolled out our financial future. For the property market, there was good news for the largest sector, and as expected, less so for the most affluent.
“Yes, it’s good news,” says Myles Wakefield, CEO of Wakefields Real Estate. “If we take the view that every little bit counts, then it’s actually great news. For our largest sector of the buying market which includes a broad band from entry to mid level, any financial relief will stimulate this vital sector of the market, make homeownership more possible for those entering the market, and allow those further up the ladder to rise, as per any healthy economy.
“The raising of the threshold below which transfer duty is not payable by 20% - from R750 000 to R900 000 - translates into real hope for those on the cusp of homeownership. For all those for whom home ownership is within their grasp – even qualifying for a home loan – but who lack the funds to pay for the transaction costs or adequate deposit, this figure represents a home. With banks insisting on higher deposits to offset any insecurity they may feel around less financially solid buyers, this amount can be the difference between owning a home...and not.
“There were few surprises in the budget, and nobody expected much tax relief. For the high income earners, it was likely they’d be affected, and they were – a new marginal tax rate of 45 percent above R1,5m, and a significant increase in dividend withholding tax by 33 percent to 20 percent. On the surface, this should go some way towards filling SARS’ not insubstantial R28b shortfall, but historically, global opinion suggests that rather than filling government coffers, it leads to an unwelcome flight of wealth out the country, one we cannot afford. Time will tell.
“The minister’s more positive economic outlook was a welcome flashlight at the end of the SA tunnel. Continued investment into infrastructure and transport networks is a very positive sign, and these too act as springboards for growth in the property sector.
“South Africans are under pressure from all financial fronts, and the increase in the fuel taxes will only serve to increase that. Increased fuel prices will, in all likelihood, escalate the drive by home buyers – particularly young South Africans - to move closer to business hubs and metros.
“Consumers will continue to feel the tension...and that feeling is a very solid reason why we need to tighten our belts in a concrete way...and get rid of debt. It’s the only effective insurance policy against tough times.
“South Africans are resilient, we know that. This budget represents possibilities for the aspirant sector of the population, and by providing that relief, the Minister gave renewed hope for homeownership. That is good for the population at large, good for the property market, and good for the economy.”
Author: Anne Schauffer
