Although there has been much discussion about the tax increases announced in this year’s Budget, we at Chas Everitt think it is actually one of the best Budgets in many years, not only from the property market perspective, but in terms of the potential it has to really improve the lives of ordinary South Africans.
Despite the major hike in the fuel and road accident fund levies, for example, I really got the sense when Finance Minister Nhlanhla Nene was presenting the Budget that government has really heard – or is at least starting to hear – our concerns about service delivery problems, public service indifference and corruption at every level, and is trying to address these issues.
And if that is so, it will do much to lift consumer confidence and encourage positive participation and investment in the economy, as well as entrepreneurship and the creation of more small businesses. (Which is obviously what the Minister was hoping for too in making the provision for much lower taxes on small enterprises with a turnover of less than R1m a year.)
Meanwhile, there was also much more money in the Budget for housing, health, education and the urgently-needed revitalisation of our cities and metros to cope with rapid urbanisation – as well as job creation initiatives in the labour-intensive construction, manufacturing, tourism and alternative energy sectors.
And if these initiatives are also allowed to start producing results, much of the current pent-up demand in the property market will be released as more people are able to earn an income and buy their own homes.
All of which puts the transfer duty changes that were also announced on Budget day into clearer perspective. By doing away with the duty on pre-owned homes costing less than R750 000, the Minister was obviously hoping to make things even easier for first-time buyers, and create a knock-on effect as existing owners are then prompted to upgrade.
And this would be positive for the whole country, not just the real estate sector, as a healthy demand for residential property is still one of the best indicators of a healthy economy where it is safe to invest.
Which is of course just what we all want the international ratings agencies such as Moody’s and Fitch to tell the world, so that all the new wealth being created around the globe – or at least a good slice of it – will be invested in South Africa and help us to grow and develop even faster.
Warm property regards,