Property Sector Thoughts on Medium-Term Budget Speech
While the primary focus of the 2021 Medium-Term Budget Speech was the government’s plan to narrow the budget deficit and achieve a surplus by 2024/2025 , property sector insiders welcomed the news that the country’s economic growth outlook has improved.
“Thankfully Finance Minister Enoch Godongwana has not announced any tax hikes or adjustments in the short-term, as rising tax has played a major role in high-net-worth individuals leaving the country and taking their business operations offshore, which has been a serious blow to both the residential and commercial property sector,” comments John Jack, CEO of Galetti Corporate Real Estate. CEO of Pam Golding Property Group, Dr Andrew Golding comments: “In addition to reassuring the markets that the government remains committed to fiscal restraint, the Finance Minister provided a strong focus on the critical need to push ahead with the long-promised structural and economic reforms necessary to unlock the growth of our economy – including bringing additional electricity capacity into the grid and fixing Eskom.
“Furthermore, support for small and medium enterprises and structural reforms to unlock increased private sector investment will boost economic growth and much-needed job creation. In this regard we also look forward to seeing long-overdue priority and additional infrastructure projects begin to come to fruition,” adds Dr. Golding.
“The Minister’s highlighting of the need to improve the service delivery of local municipalities has major implications for the valuation of property across the country, as adequate service delivery boosts investor confidence and reduces the vacancies of commercial and residential properties. We are hopeful that diversifying their primary energy sources by moving towards renewable energy to add 2 600MW to the grid from 2023 will lead to less dependence on Eskom and further GDP growth,” says Jack.
He adds: “The improved growth outlook of 5.1% for 2021 is positive and we look forward to hearing more details of government-backed fiscal stimulation projects – particularly the infrastructure fund – in an effort to accelerate that recovery of markets, particularly the property market following the challenges of the COVID-19 pandemic.”Dr Golding concludes:
“South Africa’s residential property market continues to demonstrate its resilience, with sales activity rebounding post-hard lockdown in terms of volumes or units sold back to similar levels as experienced during the previous five years, and with heightened sales values during the first half of 2021.” “Our outlook remains optimistic, as aspirant home buyers and existing home owners across all demographics and sectors of the market demonstrate a sustained appetite