Adjusting the Real Estate Budget Accordingly
Category Property
While Tito Mboweni's 2020 Budget Speech may not have focused solely on the property market, numerous items brought up during his address will ultimately contribute towards a more lucrative real estate industry.
The two primary items of the 2020 budget that relate directly to the real estate industry are aimed at injecting the property market with new life. The first change, one that will lessen the expenses of many first-time homebuyers, is the raising of the transfer duty threshold to R1 million. While properties priced at below the threshold will no longer be subject duties, the brackets according to which the duty is calculated have also been adjusted to ease the financial strain on lower-income buyers as entry-level homes often exceed the R1 million mark.
Mboweni also commented on the continued support given to first-time homebuyers through the Finance Linked Individual Subsidy Programme that has already assisted 2 000 families in purchasing their first homes. This "help to buy" programme was launched in 2012 and offers subsidies on first-time home purchases for households that earn between R3 501 and R22 000 per month. In 2019 alone, the programme offered nearly R1 billion to South Africans investing in their first homes.
Seen in isolation, these announcements already pave the way to a re-invigorated market. When considering the other items of the budget, the future of the market becomes increasingly positive.
The Government's focus on economic revival on a personal level may begin with their commitment to personal income tax relief but it doesn't end there. Another venture mentioned in Mboweni's speech that will assist with personal income, and so provide more citizens with the opportunity to enter the property market, is the continued support of the Jobs Fund, which was established in 2001 in an effort to provide innovative employment-creation ventures. Beyond the initiative's creation of 175 000 permanent employment positions, 21 000 internships have also been secured through the Fund's efforts.
Two aspects that may prove to have the most indirect, though still substantial influence on the real estate industry is the fuel price increase and the Minister's encouragement of seeking independent power providers. In an effort to lower fuel consumption, citizens may soon start looking for residences closer to their places of employment, while the continuing Eskom travesty could lead to citizens and businesses moving closer to the more sustainable and trustworthy power suppliers once they enter the scene.
While a Budget Speech is nothing to trivialise with slogans or branding ploys, as far as the real estate industry is concerned, 2020's address could have come with an Obama-esque poster reading "CHANGE", because that's what's coming.
Author: Meridian Realty
