There are four key things the South African Institute of Black Property Practitioners expects to see in Finance Minister Tito Mboweni's upcoming budget, Vuyiswa Mutshekwane, the industry body's CEO told Fin24.
These are:
- A significant increase in funding for land reform and land-related programmes;
- An increase in the amount of funding earmarked for infrastructure development and preservation of existing assets;
- A higher proportion of national expenditure being put towards small business development and support programmes, particularly in the form of equity funding and risk capital funding;
- 50% of government procurement spend on goods and services to go to women and/or women-owned businesses.
Stimulate transactions
Dr Andrew Golding, group chief executive of Pam Golding Properties (PGP), said a reduction in transfer duty across all sectors of the market, not just the lower end, would serve to stimulate property transactions across the board, with the potential to increase volumes and thereby revenue generation for government.
"As it's evident that the sectors of the housing market which are affordable for younger, including first-time buyers, are the ones which are still buoyant, anything from Budget 2019 that will boost sentiment, household incomes or affordability will provide a significant fillip for the market," said Golding.
Golding said another issue worth consideration is the endorsement of budget incentives to enable quick and cost-effective building solutions to stimulate the lower end of the market.
He would also like to see a review of rates assessments for developments.
Transfer duties, taxes
Samuel Seeff, chair of the Seeff Property Group, called on Mboweni to re-look at transfer duty, especially at the top end of the market, as well as Capital Gains Tax (CGT).
"While government had intended to boost its tax income from wealthy buyers with the introduction of these, it has actually had the opposite and stifling effect on the upper end of the market," said Seeff.
"The property sector is overtaxed. You've got transfer duty, agent's fees, lawyers' fees and CGT. In some instances, the transaction costs can run as high as 20% of the purchase price but add no value to your investment."
He would like to see government cutting transfer duty by 50%, if not altogether, or keep transfer duty and do away with CGT.
"This will boost transaction volumes and with that, higher income for the fiscus," he explained.
In his view, the current situation has also impacted foreign buyers investing in second homes in SA.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett commented that, in his view, there should not be any surprises in the 2019 National Budget for property owners, especially not so close to the national elections.
If any serious changes were to be made, he expects that they would only be announced at the mini budget in October.
According to Goslett, taxes have an important impact on disposable income levels. The lower these levels, the worse the SA economy will be able to perform.
With less money to spend, Goslett said many consumers choose to sell and fewer are able to buy, which translates into a buyer's market and a negative outlook for house price growth.