THE EFFECT OF THE BUDGET SPEECH ON THE PROPERTY MARKET
South Africa’s Finance Minister, Tito Mboweni, delivered the National Budget Speech on 26 February 2020. His speech was broadly welcomed by the real estate sector, especially Minister Mboweni’s announcement that no transfer duty will be payable on the purchase of property valued at R1 million and under. The previous threshold was R900 000 and was last adjusted in 2017.
Transfer Duty rates effective from 1
March 2020 are as follows:
|Value of Property||Rate|
|Up to R1 000 000||0%|
|R1 000 001 – R1 375 000||3% of the value above R1 000 000|
|R1 375 001 – R1 925 000||R11 250 + 6% of the value above R1 375 000|
|R1 925 001 – R2 475 000||R44 250 + 8% of the value above R1 925 000|
|R2 475 001 – R11 000 000||R88 250 + 11% of the value above R2 475 000|
|R11 000 001 and above||R1 026 000 + 13% of the value exceeding R11 000 000|
First time buyers currently make up almost half of the property buyers’ market, but affordability was a major stumbling block, dampening potential demand. Experts believe that the announced relief on transfer duties will provide much needed financial breathing space for first time buyers trying to enter the property market and as a result, boost the stagnant state of the market.
Various market leading agencies had positive comments on the budget speech:
Pam Golding Property Group CEO, Dr Andre Golding said: “The increase in the transfer duty threshold provides a very positive incentive not only for first-time home buyers, but also others seeking affordably priced homes – a sector which represents a key driver in the current market.
“It will help stimulate property transactions in this price band, increasing volumes and creating a ripple effect across the market in general – which will in turn benefit government income generation.”
Digital real estate agent Property Fox CEO, Crispin Inglis said the budget was generally positive for the sector.He added: “Not only are individuals going to be receiving some personal income tax relief, but the no-transfer duties will give many an opportunity to get a foot in the property door. Ramping up these opportunities for first-time buyers, especially, could have an important impact on a pervasively stagnant property market”.
Seeff Property Group chairperson, Samuel Seeff believes the current market now offers outstanding conditions for property buyers. “It is easier to obtain mortgage loans and the banks are granting higher bonds, especially for first-time buyers. There is now more stock to choose from and, generally, sellers have become more negotiable,” he said.
Seeff also expects price growth to remain tight around the 4% range. “Sellers in the low to middle-income price ranges up to about R1.5 million are likely to see higher price growth, but above that, it will be highly area dependent. Upper end property above R5 million is likely to continue seeing flat price growth,” he adds.
Our conveyancing department has years of experience and knowledge and will be able to assist all buyers and sellers with their property related queries. Do not hesitate to contact us for legal advice.