The news that the transfer duty threshold has been increased from R500,000 to R600,000 can only be good for first-time and entry-level buyers, says Adrian Goslett, the CEO of RE/MAX of Southern Africa. Commenting on the budget speech delivered by the Minister of Finance Pravin Gordhan, he said that this increase will help a large number of South African homebuyers, who have been struggling to cope with not only a lack of bond finance, but higher deposits and the other charges associated with property investment. “The relief will undoubtedly stimulate growth in the lower markets as more consumers find it possible to afford their own homes.”
Overall, the lifestyles of the average South Africans are improving, particularly in the disadvantaged sector. Minister Gordhan indicated in his speech that the proportion of poor households living in formal dwellings had increased from 47% in 1994 to 66%. In addition, government planned to spend a further R21.8 billion over the next three years upgrading homes in this sector.
“Additionally, the fact that government reiterated its determination to create more jobs is a very positive sign, particularly for the real estate sector,” said Goslett. At this stage 42% of South Africans aged between 18 and 29 are unemployed; the fact that the state is pouring money into the educational system both at a primary and tertiary level in an effort to improve the chances of employment is to be commended. “People with jobs, buy homes and although the country is just embarking on this initiative, the outcome should be positive.”
Goslett noted that the one factor that government needs to address is the new labour laws that are currently under review. “As things stand, there is far too much red tape involved in business. Government need to create incentives to encourage, not discourage, job creation by making it easier for both large and small businesses to operate.”
He said that most South Africans would welcome the news that government is to increase its spending on fighting crime and improving roads. However, the dramatic rise in oil prices and consequent rises in the price of fuel coupled with the 10-cent rise in the fuel levy as well as an extra 8-cent contribution to the Road Accident Fund is going to hurt consumers who are already feeling the effects of rising food prices and travelling costs.
Overall, says Goslett, the budget is positive. As was expected, social grants have been increased across the board. There was, however, some additional good news for those facing retirement who have been given a break with a tax-free lump sum benefit upon retirement increasing from R300 000 to R315 000.
“It is also encouraging that government will be addressing the findings of Judge Jali’s Enquiry into Competition in Banking. During the budget Minister Gordhan stated that he believes that it is time to put measures in place that will ensure that banking charges are fairly set and do not create undue hardship.”
“The relief to homebuyers and other measures implemented to stimulate the economy, including job creation, is widely welcomed by both the private and business sector and will, hopefully, put South Africa on the firm road to economic recovery,” concludes Goslett.