Tough budget was needed — property industry
“It is what is needed at this point in our economy,” said Leapfrog Property Group CEO Bruce Swain.
Property industry leaders say while the 2018/2019 budget is necessarily tough, initial belt tightening could lead to an improved property investment environment.
He advised home owners to look after their budgets carefully. “It’s going to be more important than ever to know where every cent is going, to ensure that home owners do not run into financial difficulties,” said Swain.
“Sellers and mortgage lenders still favour buyers with sizeable deposits and buyers may well find that they can’t put away as much as they had originally budgeted on.”
Pam Golding Property group chief executive Andrew Golding said an interesting aspect of the budget speech was the proposal that about 195,000 government-owned properties, with an estimated value of more than R40bn, would either be better used or sold in the short to medium term.
This could unlock revenue as well as opportunities for property development and redevelopment.
Jawitz Properties CEO Herschel Jawitz said that while the budget provided no financial impetus for the recovery of the residential market, the key factor of renewed consumer confidence would help to improve property prices and demand in 2018.
“The estate duty on estates above R30m has been increased, which may impact on the luxury end of the market once again,” said Jawitz.
Seeff Property Group chairman Samuel Seeff said an improved economic outlook was welcome news, but rising taxes for working households was unsustainable for an economy that needed to accelerate to address the challenges in the country. Although the year had started on a more positive note, Seeff said people needed to see that government and economic mismanagement was being addressed. Uncertainty about property ownership was also concerning. “They need reassurance that their investments and property will be safe.”
Chas Everitt International property group CEO Berry Everitt said the budget contained some hopeful elements for the property sector.
“Despite implementing the widely expected VAT increase from 14% to 15%, for example, Treasury has at least taken care to limit its potential negative effects on the poorest households by announcing above-inflation increases in old-age and disability pensions as well as child grants.”
He said significant allocations had been made to encourage youth employment, support small businesses and revitalise the mining, agricultural and manufacturing sectors.
“More jobs will mean more property sales and rentals, and rising investor confidence will also help to keep inflation in check and could even mean some interest rate cuts this year.
“That would of course make it easier for more people to qualify for home loans and buy their own homes. Our understanding is that the banks are keen to see this happen, so our outlook for residential property over the next 12 months is distinctly positive,” said Everitt.