Between the State of the Nation Address (SONA) and the Budget Speech, South Africa's real estate agents have expressed a sense of disappointment.
“We were expecting a conservative approach,” said Tony Clarke, MD of the Rawson Property Group. “It’s an election year, so the ruling party is naturally wary of rocking boats. At the same time, the fiscus is on life support, so increasing revenue was always going to be a priority.”
Unfortunately for the property industry, the government’s chosen route to boost revenue is centred more on taxation than on direct economic stimuli.
“As a major contributor to the GDP, the real estate industry has a lot to offer the economy and the public purse,” said Clarke. With no increase to the transfer duty threshold, the budget may, in fact, end up having the opposite effect on market activity.
“As inflation and property prices rise, fewer and fewer homes are falling under the R1.1 million transfer duty threshold,” the property expert said.
“That’s making it a lot more difficult for the average South African to get a foot onto the property ladder – a definite step backwards in terms of homeownership accessibility, and a missed opportunity to stimulate long-term economic growth.”
It’s not just transfer duty that will make homeownership less accessible in the coming year, either. Increases in other taxes will also eat into the consumer's pocket.
“The government took a subtle approach to boosting tax revenue this year,” said David Jacobs, Gauteng Regional Manager for the Rawson Property Group.
“They avoided highly visible increases – like general fuel levies or personal taxes – in favour of less obvious ones like a higher carbon fuel levy and no inflationary adjustments to tax brackets. The result is the same – consumers are going to be paying more in taxes, particularly if you include sin taxes – but in a way that’s easier to downplay in an election year.”
Another disappointment was the decision not to extend the solar rooftop tax incentive for residential properties.
"It would be great if that contribution could be recognised and encouraged further by enabling more homeowners to embrace eco-friendly solutions that add value to their properties," said Jacobs.
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