Herschel's review of the 2022 Budget Speech
Herschel Jawitz, CEO of Jawitz Properties says that while the 2022/23 budget does not give direct relief to the residential property market, there are some positive aspects. From a direct property point of view, there has been, as expected no changes in the transfer duty thresholds or percentages and no changes to the Capital Gains Tax exemption threshold of R2 million for a primary residence.
A key part of the activity in the residential market has been from first time buyers who have been able to take advantage of the one million rand transfer duty threshold exemption. Property prices have increased over the last year by approximately 4 to 5%. As such the transfer duty exemption should have been adjusted for property price inflation.
From a general budget aspect, the commitment to reducing the budget deficit to 4,2% over the next three years is welcomed. What is positive is the attempt to 'protect' consumers disposable income. This comes in the form of increase the personal income tax brackets by 4,5% most of which will go to the lower and middle income earners and which will go some way to shielding consumers from the increased cost of living. In addition, as South Africans face record petrol prices, there will be no increase in the fuel levy or the road accident fund levy. In itself, these may be small gestures but they will provide consumers with some relief.
The residential property market has reaped the benefit of low interest rates over the last two years but with rising rates and record fuel prices putting pressure on disposable income, the budget does provide some relief from a further increase in our cost of living. While it may not have a positive impact on the market in terms of increased sales, it will offer some marginal support to consumers and thus to buyers from an affordability point of view.