It is good news for first-time buyers and banks, said Berry Everitt, chief executive of Chas Everitt International Property Group.
“Many banks are now offering home loans that include transaction costs such as transfer duty, bond registration and legal fees. Their risk will be lower, and this many enable them to offer better interest rates in competition for new borrowers.”
For prospective home buyers and existing homeowners, the additional R426billion allocated to assist local authorities to deliver better basic services and maintain existing municipal infrastructure is also encouraging.
“This also protects property values,” Everitt said. Encouragingly, one of the primary beneficiaries of the 2020 Budget is first-time homeowners, says Pam Golding Property Group chief executive, Andrew Golding.
“A key positive for the local housing market is the demographic dividend of a young population, with about two-thirds of the current population under the age of the average first-time buyer (34 years, according to ooba).
“While first-time buyers currently account for about half of all mortgages currently facilitated by ooba, affordability has tended to dampen potential demand.
“Lifting the transfer duty threshold will help stimulate property transactions in this price band, increasing volumes and creating a ripple effect across the market in general, which will benefit government income generation,” Golding said.
The increase in the transfer duty threshold to R1 million and the personal income tax relief will make things a little easier for home buyers and “will stimulate housing demand, especially at the lower end of the market”, said Gerhard Kotzé, managing director of the RealNet estate agency group.
The market for sellers will, however, remain tight in view of the continued weak economic outlook, said Samuel Seeff, chairperson of the Seeff Property group.
However, the group expects an increase in buyers as they adjust to the “new normal” for the economy and property market. Seeff expects price growth to remain tight at around the 4% range. Sellers in the low- to middle-income price ranges to about R1.5m are likely to see higher price growth.
Above that it will be highly area dependent. Upper end property above R5m is likely to continue seeing flat price growth. While consumer spending will remain under pressure, there is much to anticipate, sad Crispin Inglis, chief executive of PropertyFox.
“Not only are individuals going to receive personal income tax relief, but the increased exemption in transfer duties will give many an opportunity to get a foot in the property door. Ramping up these opportunities for first-time buyers could have an important impact on the market.”
As consumers did not carry the burden of the budget, Jawitz Property chief executive Herschel Jawitz said it is good news for consumer confidence, a “key to the recovery in the residential property market”.
Transfer Duty figures
The budget changes will see transfer duties (based on property value, not sales price) being applied as follows from March 1:
- Up to R1million – 0%
- R1000001 to R1375000 – 3% of the value
- R1375001 to R1925000 – R11 250 + 6%
- R1925001 to R2475000 – R44 250 + 8%
- R2 475 001 to R11 000 000 – R88 250 +11%
- R11000001 plus – R1 026 000 + 13%
Supplied by STBB
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