Property Market responds to unchanged Taxes amid Economic Concerns
The recent announcement of unchanged property taxes has garnered mixed reactions within the property market, juxtaposed against prevailing concerns about economic stagnation and heightened inflation.
- Good news is that there is relief on property taxes including CGT and Transfer duties
- Opportunities missed for adjustments to transfer duty threshold, personal taxes, and also extending the solar rooftop tax incentives
- Future is focused on stimulating growth
- Budget is conservative and is all about the election on 29 May
In response to Finance Minister Enoch Godongwana's 2024 budget, Samuel Seeff, Chairman of the Seeff Property Group, expressed a sense of relief that property taxes, including Transfer Duty and Capital Gains Tax, remain stable for the current tax year. However, Seeff also voiced a desire for tax cuts to stimulate the property market, lamenting the missed opportunity for such measures.
Particularly disappointing to the market is the lack of adjustment to the transfer duty exemption threshold, which remains at R1.1 million. This decision neglects the needs of buyers in more affordable price brackets, exacerbating affordability challenges.
Amid these concerns, the absence of adjustments to personal tax rates and brackets is met with disappointment, as consumers must absorb inflation without corresponding adjustments. This may impact purchasing power, especially in the real estate sector.
Moreover, the downward revision of economic growth projections raises alarms, highlighting the urgent need for economic rejuvenation to bolster property markets and prices.
Despite these challenges, there is optimism regarding potential interest rate cuts anticipated from mid-year, which could stimulate buyer activity by easing financial burdens. Additionally, favourable lending conditions and subdued price growth currently offer opportunities for property buyers, particularly first-time buyers.
In a related development, Dr. Andrew Golding, CEO of the Pam Golding Property group, expresses regret over the budget's failure to extend the solar rooftop tax incentive, emphasising its importance in addressing the country's energy crisis.
While certain measures, such as the unchanged fuel levy and RAF levy, provide some relief to consumers, concerns linger about bracket creep and its potential impact on higher-income earners. Nevertheless, the budget's commitment to infrastructure investment, particularly in logistics through Public Private Partnerships (PPPs), is seen as a positive step toward economic recovery.
Despite the absence of significant tax increases, the budget's failure to address key issues such as transfer duty thresholds and solar incentives underscores missed opportunities for stimulating economic growth and easing financial burdens on consumers.
In conclusion, while the budget maintains stability in certain areas, such as income taxes, and offers some positives, such as infrastructure investment, there is a sense of missed opportunities to address pressing issues within the property market and broader economy. Moving forward, the focus remains on stimulating economic growth and addressing key challenges to foster a more resilient and prosperous property market.
