The budget did include a controversial 1% increase in Value Added Tax (VAT) over the next two years.
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South Africa’s Finance Minister, Enoch Godongwana, garnered the attention of the property sector as he delivered his 2025 National Budget Speech on Wednesday.
His announcement of planned government spending on infrastructure drew praise from industry leaders who see a direct correlation between infrastructural improvements and economic growth.
Dr Andrew Golding, the CEO of the Pam Golding Property group, said, “It was positive to note that the critical need for infrastructural improvements has been highlighted in the National Budget, as investment in sound infrastructure with a focus on energy, clean water supply and effective sanitation, well-maintained roads and other transport facilities, as well as affordable and effective broadband connectivity, promotes economic growth, and fosters employment opportunities."
"It also ultimately attracts new businesses and both residential and commercial property development and helps foster thriving economic hubs.investment in owning one’s own home is recognised as a key aspiration for people across all sectors of the market, with benefits including capital appreciation and potential rental income," he added.
Godongwana also announced a 1% VAT increase that will occur over the next two years in the country.
Golding said from a property perspective, there are a number of VAT-inclusive services associated with the purchase of a home, for which buyers will need to allocate additional budget, which will impact particularly on first-time buyers seeking to gain a foothold on the first rung of the property ladder.
"The transfer duty threshold was last adjusted to R1 million in 2020/21 which compares to the average purchase price paid by a first-time buyer of R1.24m. Obviously, it was difficult to adjust again with current pressure on the fiscus, but an adjustment is due particularly given the surge in inflation in the wake of the pandemic. Furthermore, purchasers of new-build units will also be affected, as VAT is incorporated in the purchase price of new developments when brought to market by developers. The fact that the fuel levy has not been increased is positive, however, South Africans across the board will be negatively impacted by the lack of inflationary adjustments for personal income tax bracket creep, and for medical tax credits," Golding said.
Meanwhile, Herschel Jawitz, the CEO of Jawitz Properties, said surprisingly, the transfer duty tables have been adjusted to account for property price inflation, which is good news for buyers.
"For a start, the threshold below which transfer duty is not payable has increased by 10%, from R1.1 million to R1.21 million. For a first-time buyer, the savings will be R3,300, which is a meaningful amount of money. The transfer duty saving will be similar for a purchase price of R1.5 million. On a purchase price of R2 million, a buyer will now pay R7 839 less transfer duty than last year. The adjustments to the transfer duties send a very positive signal to the market, which is already starting to see the benefit of lower interest rates and improved overall sentiment," Jawitz said.
Adriaan Grové, the CEO of MyProperty, said more concrete plans were needed from the budget speech to stimulate the economy.
"The market thrives on confidence but in order for buyers, sellers and investors to feel confident to transact they need to feel assured by reasonable tax measures, favourable policies and a stable political climate. In my view, the budget speech did not do enough to inspire confidence. A tangible example of what would have been productive for the property sector: To raise the current transfer duty threshold - currently R1.1 million - to help reduce the upfront cost of buying a home and help stimulate the supply-demand balance," Grové said.
He added that reduced transaction costs make property purchases more affordable, particularly benefiting first-time buyers and encouraging investment in the property market.
"An adjustment of this kind can lead to increased demand for housing, stimulating growth in the real estate sector. A more liquid real estate market, spurred on by lower transaction costs, will also make it easier for existing home owners to upgrade, downgrade or relocate. Lower costs can also help short-term home flipping strategies, where investors buy, renovate and sell homes more frequently," he added.
"If we can boost first time homeownership, we will have a larger pool of active participants in the market. In turn it can create demand for the mid and high-end properties range as existing home owners move up the property ladder. The resulting economic benefit from this can stimulate real estate services (agents, conveyancers and banks) and even the construction industry. Higher VAT and tax revenues from associated services can partially help offset the loss in transfer duty collections. Overall, lowering transfer duties can help make the real estate sector more fluent and dynamic, and this past budget speech certainly was a missed opportunity in this regard.”
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