22 February 2024
Between SONA and the Budget Speech, general sentiment among South Africa’s real estate agents appears largely unimpressed, with a side-helping of disappointment.
“We were expecting a conservative approach,” says 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,” says Clarke. “We were hoping to see this potential recognised, and a greater emphasis placed on stimulating market activity.” 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 R1.1million transfer duty threshold,” says Clarke. “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 consumer affordability.
“The government took a subtle approach to boosting tax revenue this year,” says 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.”
More disappointing news for the real estate industry was the decision not to extend the solar rooftop tax incentive for residential properties.
“We had high hopes that residential solar rebates would be extended past the February cutoff after the President highlighted renewable energy plans in this year’s SONA,” says Clarke. “Private households have already made an important contribution to alleviating loadshedding woes. 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.”
Despite the disappointments, both Clarke and Jacobs acknowledge that the budget wasn’t entirely bad news for the property industry.
“Things aren’t getting easier for consumers, but they’re also not getting dramatically worse,” says Jacobs. “From an economic growth perspective, the focus on reducing government debt, improving infrastructure, and fostering Public Private Partnerships to support our struggling logistics sector is very encouraging. If we can see progress on these fronts, the effects on consumer and investor confidence could be significant, which would have positives knock-on effects for the property market as well as job creation and economic growth in general.”
