Housing development, subsidies and informal settlement upgrades were among the key ingredients in this week’s Budget, which has left real estate players more than satisfied with the government’s recipe for economic – and property market – recovery.
Of course there was no specific relief for property buyers in the form of a transfer duty reduction or an increase in the threshold, but Berry Everitt, chief executive of the Chas Everitt International, “applauds” the Budget’s assurance that the country’s taxpayers do not have to pay off Eskom’s entire R400 billion debt.
Acknowledgement of the need to “fix” Sars to ensure efficient revenue collection and shed the massive public sector wage bill were also welcomed announcements.
“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,” said Everitt.
The Budget was “measured” and “in the best interest of the country right now”, acknowledges Samuel Seeff, chairperson of the Seeff Property Group, but he is disappointed there is no relief for the property sector or consumers.
“The property market has had to absorb the effects of higher taxes along with cost increases in recent years which have manifested in lower transaction volumes and the value of transactions in the upper price bands.”
Although these concerns were echoed by many property bosses, they also noted the positives, and some of these, says Gerhard Kotzé, managing director of the RealNet estate agency group, include the news that R30.5billion is to be given to roads agency Sanral to spend on non-toll roads, and that the Development Bank and Infrastructure Fund will disburse more than R500bn over the next few years on water supply, solar geysers, student housing and other infrastructure projects.
South Africans can also look forward to “a lot more” high-rise housing developments in and around its major metros in order to provide affordable accommodation for a rapidly urbanising population, he says.
Echoing this, Andrew Golding, chief executive of the Pam Golding Property group, says shifting from “horizontal” development to vertical would suggest that government incentives might reinforce the shift towards the construction of more sectional title homes – a trend already evident in many of the country’s major metro housing markets.
For BetterBond, however, chief executive Rudi Botha says the most exciting aspect of the budget announcement is the “clear indication from finance minister Tito Mboweni that the government is in favour of private property ownership”.
This is 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 R37bn over the next three years to assist emerging farmers who wish to purchase land.”
Botha also welcomes the R14.7bn funding for grants to assist in the upgrading of informal settlements. The introduction of a R950 million pilot subsidy programme for first-time buyers is also “very encouraging”, believes Herschel Jawitz, chief executive of Jawitz Properties.
He says: “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.”
Key Issue
Highlights for consumers and the property market:
- R950 million for first-time home buyers
- R37 billion for emerging farmers to buy land
- R14.7 billion to assist in the upgrading of informal settlements
- R30.5 billion to uplift non-toll roads
- R500 billion on student housing and other infrastructure projects.