Pre-Budget Speech review on the residential market
Ahead of the 2022 Budget Speech, 23rd February - Herschel Jawitz, CEO of Jawitz Properties says that despite better than expected revenue collections and an active residential market, very little is expected in terms of direct budget relief for consumers when the budget is announced today.
A key support for the residential property market and especially for first time buyers would be the increase in the price threshold below which transfer duty is not payable. The current price threshold is R1 million. To keep pace with property price growth, this amount should increase to at least R1050 000. We saw a real surge in first time buyers post lockdown in 2020 driven by historically low interest rates which was very positive from a home ownership point of view and for the overall recovery in the residential market. With interest rates going up, any further transfer duty relief would be market positive especially in this part of the market.
The other area of possible relief would the increase in the Capital Gains Tax threshold which is currently at R2 million on primary residences. CGT is largely seen as a wealth tax and so no relief is expected. With increases in interest rates, petrol prices and electricity, the key to a property friendly budget will be the level of personal income tax relief especially for the lower and middle income brackets.