BUDGET SPEECH BRINGS GOOD NEWS FOR NEW AND REPEAT HOME BUYERS

Jors van Niekerk, CEO of bond originator MortgageMax, says this Budget is positive for property on both the macro level and the more specific level.

“Looking at the specifics first, the increase in the Transfer Duty threshold from R750 000 to R900 000 is very welcome. This will be a big relief especially to first-time buyers because it means they will need less cash to enter the market. Even though the market has been sluggish for the past three years, house prices have continued to grow, and the national average is now around R1m. This means it is not unusual for first-time buyers to be looking at homes costing R900 000, especially in the big metros." The saving amounts to approximately R4 500 in transfer duty.

“This means they should be able to advance their purchases by a number of months, and we expect to see an increase in home loan applications from this sector as a result.

“However, first-time buyers are not the only one who will benefit from today’s Budget. Repeat buyers who are downscaling will also avoid transfer duty, as will many of those who are buying retirement flats and cottages. In addition, property investors with portfolios, rental units or student flats, for example, will not have to worry about a Capital Gains Tax increase that might have negatively affected the returns on any resale units.”

Taking in the bigger picture, he says, consumers should be encouraged by Finance Minister Pravin Gordhan’s decision to direct the Budget firmly towards growth and job creation, rather than take a more cautious approach by holding back and trying to reduce the budget deficit. “Putting funds into rebuilding business and consumer confidence and promoting investment, tourism and the establishment of new businesses is definitely the way to go if we want our economy to recover and flourish.

“And on top of that, the Minister has made large additional allocations to basic and higher education, social housing, urban regeneration, infrastructure repairs and improvements, and the expansion of public transport networks. If these are properly utilised, there will be a further positive spinoff for the real estate market. “

Meanwhile Van Niekerk says, consumers will be relieved that there was no VAT increase announced in the Budget, but will still need to keep a close watch on household budgets this year. “Bracket creep will mean that almost everyone will be paying somewhat more income tax, while the fuel levy and road accident fund levy increases will mean higher transport costs from April. Debt levels are also still very high and affordability will still be a problem for many prospective home buyers. For this reason they should be sure to consult with a reputable bond originator and obtain home loan pre-approval as the first step in the purchase process.”