What does budget 3.0 spell for the property market?

South Africans have dealt with a back-and-forth process regarding the annual budget, but it seems we finally have something more accessible with the recent table of Budget 3.0. 

The good news is that there will be no VAT increase, which spells a positive outlook for buyers and sellers. But what will the property market look like after the other proposed changes? 

Here are the key indicators to be aware of:  

Modernisation funds for Home Affairs is being scaled down

This decision could have real implications for the property market. Home Affairs has a vital role in property transactions, and delays in this department can slow down investments and make doing business in South Africa significantly more strenuous. 

Modernisation is the only way our property systems will keep up with market demand so this decrease could spell a challenging future. 

Tax brackets have not changed

Tax brackets have not been adjusted to account for inflation, which means that those who are pushed into new tax brackets will make less money. 

It indicates that buyers will be much more cautious when making investment decisions. Property Practitioners will do well to work within budget constraints and help guide prospective buyers. This is the best time to get in contact with your agent; they hold the knowledge about how you can reach your goal while still having a smaller budget than expected. 

There’s a 10% increase in transfer fees threshold

The good news from the new budget - aside from the VAT decision - is that the 10% increase in the transfer fee threshold is being upheld. 

This means that properties up to R1.21 million are exempt from transfer fees. This is a meaningful number for first-time buyers, who average around R1.24 million in their first-time homes. This will make the process easier, and we could see a shift in the market because of this decision. 

While there are elements to be aware of in the new budget, overall, it’s a positive outlook. The National Treasury has made an effort to produce a politically workable budget. This is good news for establishing trust from South African citizens and good news for consumer confidence in the property market.

It’s up to Property Practitioners to enable conditions that allow more South Africans to become homeowners. Being aware of these changes is essential, but maintaining a good relationship with your agent is how you can navigate any challenges that come from them.