In the next few days we will see South Africans absorbing and understanding what the Budget Speech means to them. Despite the expected growth being slow, it is evident that the government is taking strategic steps to build a stronger economy. We know that the budget speech, along with the State of the Nation speech, have painted a promising picture for South Africans and foreign investors.
“Individual taxpayers are breathing a sigh of relief as the much-needed personal income tax remains unchanged. In fact, individual income taxpayers are expecting to pay around R2 billion less in income tax. We expect this to alleviate some existing pressure for consumers, and possibly aid those who are wanting to enter the property market for the first time,” explains Stefan Botha, Rainmaker Marketing Director.
“With the repo rate cut at the beginning of the year, as well as lenient lending for bonds, we have already started seeing momentum in property purchasing below the R1 million price mark, with a substantial amount of first-time home buyers taking advantage of these opportunities. As anticipated, we are only going to see the first-time home buyer’s market grow exponentially, especially with the transfer duty threshold extended from R900 000 to now R1 million. This change is going to be a game-changer in the property development industry as more developers configure products that are targeted to this price range,” shares Botha.
The Corporate Tax has remained the same at 28% for the last 5 years, however, plans to reduce this tax in the future will bolster our businesses and further create investor confidence. “We have some way to be on par with some of the corporate taxes across the globe, who in some instances sit at around 20%. This possible change will not only help in the economic growth and transformation, it will affect how foreign direct investors portray our country and will ultimately steer them to invest in our country, more so, in our property market,” shares Botha.
The South African public didn’t go unscathed by the budget speech as some of the expected levies for fuel, carbon tax, and sin taxes were increased. “As mentioned before, the growing fuel levy will drive how and where people decide to live and invest in their primary residential property. We expect to see an increase in developers launching estates that promise the ideal live-work-play lifestyles, to the growing trend of people wanting to live close to where they work,” says Botha.
Eskom is the governments number one task, and it is said that the government has vowed to do ‘whatever it takes’ to ensure a constant supply of electricity. The state has allocated R230 billion, over the next 10 years, to restructure the energy sector. “In light of Eskom’s debt and struggles, we believe property developers are going to be part of the revolutionary changes we see in our day-to-day power supply, as they move towards creating properties that use energy efficient resources and innovative means to create greener, more sustainable lifestyles in the country,” shares Botha.
The theme in this year’s budget speech is to produce growth-enhancing structural reform. Instead of following the same script each year and expecting different results, the state has set out some unexpected changes to achieve meaningful and sustainable growth for the South African economy. “We can’t wait to see how this will positively affect our property market, and we anticipate the shift in property demand will challenge developers to look beyond the ‘same-old’ estate development model,” ends Botha.