Gordhan’s shot in the arm for lower-end property market

Finance Minister Pravin Gordhan Picture: Esa Alexander
Finance Minister Pravin Gordhan
Picture: Esa Alexander

First-time homebuyers could find themselves thanking Finance Minister Pravin Gordhan‚ with analysts anticipating more people could join the property market following an adjustment in the transfer fee threshold.

Yesterday Gordhan announced that when buying properties worth up to R900 000‚ buyers would not need to pay transfer costs. This is an increase from R750 000.

The change would benefit people on the lower end of the income scale‚ but wouldn’t show immediate benefits‚ said John Loos‚ FNB’s household and consumer sector strategist.

“You’re not going to see the transaction volumes suddenly increase in the months to come because of an adjustment like this‚” he said.

While the difference to the market might not be that significant‚ potential home buyers would see benefits‚ Loos said.

“Look‚ it makes a difference‚ especially for the people at the lower end of the market‚ the people buying at below R1-million‚” Loos said.

FNB’s property barometer report‚ released in January‚ examined first time home buyers found “things appeared to get tougher” for them.

“This group of entry-level home buyers is arguably more sensitive to economic events and interest-rate hikes‚ having not yet built up substantial financial reserves‚ and often heavily dependent on credit in order to make purchases‚” the report found.

“Not surprisingly‚ therefore‚ the sample of estate agents surveyed through 2016 estimated first-time buyers to make up 20% of total buying‚ which represents the second year of decline in this percentage from a 26.5% high in 2014 and 24.25% in 2015‚” the report said.

Tobie Basson‚ a realtor at Remax Infoglobe‚ however‚ said: “It will definitely have a positive effect on the market. You will see more sales in that region and below.”

“I think they’re trying to boost and encourage first-time buyers. Buying a home is always a good investment‚” Basson said.

Lew Geffen‚ chairman of property firm Lew Geffen Sotheby’s International Realty‚ said anyone still viewing the country’s medium-term economic outlook through rose-tinted spectacles had them rudely ripped off by Gordhan on Wedndesday.

“There are unquestionably harsh times ahead.

“We’re immensely grateful there was no increase in VAT‚ but the new super-tax bracket of 45% for individuals who earn more than R1.5 million isn’t good news for the upper end of the residential property sector.

“And while we applaud the raising of the property transfer fee threshold to R900 000‚ in reality it will only provide relief for low to lower-middle income households‚” he said.

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