What impact will the 2015 budget have on the property market?

Speaking at the Budget Speech for 2015, Finance Minister, Nhlanhla Nene, voiced concerns regarding the deficit between the projected tax proceeds and government’s revenue requirements for the year ahead, despite the expenditure ceiling being lowered.
As a result, Nene announced that the gap would need to be bridged, which means that taxes would need to be increased. Aside from the usual increases in sin taxes, consumers will also have to deal with increases in the petrol price, electricity tariffs and personal income tax.
Adrian Goslett, Regional director and CEO of RE/MAX of Southern Africa, said that these increases are likely to put further financial pressure on households, especially considering that the majority of South African consumers are already dealing with high debt-to-income ratios. According to Nene, personal tax would be increased by one percentage point for tax payers who earn more than an annual salary of R181 900. This translates to taxpayers earning R200 000 a year, paying around R21 more per month. Those earning R500 000, will pay an extra R271 per month and those earning R1.5 million a year will pay around R1 105 more monthly. Essentially the net effect would be a relief for taxpayers earning below R450 000, while those earning more would be more affected.
Goslett notes that the electricity challenge that the country is currently facing is holding back economic growth, which is expected to be at around 2% for 2015, growing to 3% in 2017. It has been proposed that the electricity levy will increase from 3.5 cents to 5.5 cents per kilowatt hour. This increase of 2 cents will be withdrawn once the electricity shortage has been resolved.  “The increase means that a household that uses around 500 kilowatts per month will pay a further R10 a month, which the minister believes should make a large impact in resolving the power shortage issue,” says Goslett.
He says that a very positive point that was announced was the adjustment in transfer duties on property sales. “No transfer duty will be paid on a property sold for below R750 000, which has been increased from the previous benchmark of R600 000. This will bring relief to property buyers who may be holding out on purchasing a property due to the numerous costs associated with a property transaction. While transfer duty on homes sold for R2.25 million and more will increase, no transfer duty on homes below R750 000 should help to stimulate demand for property in this sector of the market,” says Goslett.
The minister also pointed out that unemployment remains one the country’s biggest economic challenges and every effort will be made over the remainder of the year to increase the amount of jobs and employment opportunities. One of the ways in which government aims to achieve this is by spending R3.5 billion on small business development within the private sector. “More jobs means more people who are able to support their families and contribute towards the economy. Job creation will stimulate economic growth and contribute positively to all sectors,” says Goslett.
“Consumers will need to continue to make an effort to curb their spending and focus on reducing debt levels to be able to absorb the increased cost of living. This is particularly important for those who aspire to purchase a home during 2015,” Goslett concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us