Property Flash


February 21 2024

The budget which was tabled on Wednesday didn’t really impress SA’s real estate sector, especially the residential side including estate agents.

Lew Geffen Sotheby’s International Realty CEO Yael Geffen said Finance Minister Enoch Godongwana’s attempt to “present a silk purse from the economic pig’s ear on his plate was laudable”, but “fell far short of what the country needs to turn the growth tide”.

“It was a good news, bad news budget in the spirit of ‘one step forward, two steps back’.

“A prime example is that the general fuel levy isn’t going up but the government is increasing the carbon fuel levy to 11 cents per litre for petrol and 14 cents per litre for diesel. What we gain on the swings, we lose on the roundabout. The same goes for personal income tax. There’s no direct increase – but tax tables haven’t been adjusted for inflation either,” she said.

This means if you get an inflation-related wage or salary increase this year, you might be pushed into a higher tax bracket. This is bracket creep.

“To balance this the government should increase tax thresholds by at least inflation to protect consumers,” Geffen said.

“But not this year. The good news is that personal tax will stay the same. The bad news is bracket creep could cost taxpayers as much as R16bn more in 2024,” she said.

“It also puts the dream of owning a home even further out of reach for many South Africans, which doesn’t bode well for property market recovery this year either. Real estate is a sector that contributes substantially to GDP and the government should be making every effort to support rather than smother it,” she said.

Andrew Golding, CE of Pam Golding Properties (PGP) said that while there were no real surprises or major tax increases, from a housing market perspective, it was regrettable that the National Budget did not seize the opportunity to extend the solar rooftop tax incentive for residential properties, as this expires at the end of this month (February 2024). This enabled households who invested in solar panels to receive 25% of their solar spend back as a tax credit.

“Apart from hoping for an extension of this incentive, it would have been beneficial to homeowners if it had included additional costs such as generators, invertors, batteries, plus those used for security purposes,” he said.

While the business incentive for solar panels will run until 2025, homeowners who are beset with the soaring costs of electricity, fuel and food, among others, as well as dealing with ongoing loadshedding, would have benefited from a much-needed extension amid the country’s energy crisis.

Fortunately, the general fuel levy will not increase in the 2024/2025 Budget.

“Given the Minister’s imperative to derive increased income, while disappointing, it was anticipated that there would be no further relief on transfer duty on residential property transactions in this year’s Budget – a factor which impacts first-time home buyers wanting to acquire their own homes. Currently, properties below R1.1m avoid any transfer duty payments, and according to recent Lightstone statistics, the bulk of first-time buyers look to purchase in the R700 000 to R1.5m price bands,” said Golding.

Of critical importance is that we begin to see significant investment in infrastructure start to take effect, which will boost market sentiment, which includes the property market and help create a favourable and investor-friendly environment in which to conduct business, thereby increasing job creation and fuelling the economy. In this regard, it is encouraging to note the government’s intention to foster Public Private Partnerships (PPP’s), notably regarding financial and technical support in the logistics sector, namely rail and ports, among others,” he said.

Golding however said that the budge managed to plug the government revenue – spending gap without adding significantly to the financial squeeze already endured by households.

“It may not have been overly surprising or exciting but it was a solid, no-nonsense budget which one may be thankful for in an important election year,” he said.

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