How the budget speech affects property
Category Market News
Reporter: Not so long ago, we saw the budget speech take place, and with that, alterations are inevitable. Yet how does it affect the property market, and should we be concerned with the ramifications?
Simon Bray: This year was no different. I think everyone was on the edge of their seats. Guys were really interested in what Pravin Gordhan had to say. I think this year more than any other year, we're really looking to rebuild confidence in the South African economy and point to a new and affluent future for South Africans. What it means for the property market is really interesting. Property is a big part of the economic story in South Africa. South Africa's certainly the biggest middle-class economy in Africa, and property really drives the middle class. So we were looking for a budget speech that really restored confidence in the economy and gave us some indicators that property ownership was still a good asset class for people looking to get ahead in in our market. I think we got that. It was a good budget speech from that perspective.
What does it mean for the individual? If we're talking about investing in property, we talk transfer duties, we talk tax. What can we expect going forward?
There are many different ways that the budget actually affects property ownership. The taxes in particular play a big role in in the cost of ownership around particular types of property, so I was very pleased to see that this year those taxes didn't move too much. In fact, there was a really great allocation. R62 billion has been allocated towards the affordable housing market, so we're going to see a great housing subsidy scheme coming at the low end of the market. That's really great because it creates this culture of South Africans wanting to get into the property ladder, starting at the bottom and then growing over the coming years.
I think this is great. For anybody to be able to call a certain place their own, that they've bought, it's a great thing. But what does it all actually mean? I think a lot of people might be asking the question going forward - specifically 2016, maybe going into next year - is it a good time to buy specifically now, or if you do own a property should you think about selling maybe?
The great news is there weren't many shocks in the budget. Transfer duties remained pretty much unchanged. There was a little bit of an adjustment to the top end of the market. Guys who own over R10 million properties are going to pay a little bit more in transfer duty. Capital gains tax, which is that profit tax that you get - what you bought the property for and what you sold it for, and what that gain is - that's going to be a slightly higher tax than usual. But no real shocks. Otherwise, I'd say it's business as usual for the property market, and with some of the other areas of investing tightening up, shares being a little bit uncertain, the exchange rate certainly being very volatile, it makes property a safer bet, so I think you're going to see a good year for the property market.
So in your words - good thing, go out there. If you can, smartly invest in a piece of property.
I think Pravin Gordhan's speech was exactly about that. We've got to tighten our belts as South Africans, and look for the smart investments. I think that's what a platform like Private Property allows you to do. You can search across the market. You can definitely find the right locations that are performing better than the rest of the market. You can invest in types of property that are low-maintenance costs, like sectional title flats and apartments. It's about finding the right property investment in the coming years.
Article Sourced from Private Property Website
Author: Private Property Blog
