Herschel Jawitz, CEO of Jawitz Properties comments on the Budget Speech 2018 made today.
The National Budget is as expected, with a focus on reducing the deficit, giving marginal relief to those who need it most, and continuing to directly, or indirectly place a greater tax burden on the wealthy. With an increase in VAT by 1% and the increased fuel levy, together with all of the other increases such as sin taxes, almost all South Africans will have less real disposable income on March 1 2018, than they do today. This is a very tight budget.
Economic growth remains low at a projected 1.5% for 2018, and there is still a lot of work to be done to fix the damage caused by ex-President Zuma and his administration. Details on the SOEs and how government proposes to fix them were particularly vague. Jawitz Properties welcomes the comments on the Integrated Urban Development Framework to improve the quality and productivity of our urban areas, which will play an important role in preserving and improving infrastructure in these areas, as well as enhancing property values. The key will be the implementation of these initiatives.
From a residential property point of view, there are no changes to transfer duty, the capital gains tax exemption on a primary home or the effective tax rates for capital gains. The government has got little or no room to move, and with property price growth and the volume of sales at current levels, there was no expectation that transfer duty thresholds would be increased. The estate duty on estates above R30 million has been increased, which may impact on the luxury end of the market once again.
While the budget provides no financial impetus for the recovery of the residential market, the key factor of renewed consumer confidence will help to improve property prices and demand in 2018.