Finance Minister Pravin Gordhan’s announcement of relief to home-buyers is to be applauded – but could go further, says Peter Gilmour, Chairman & Regional Owner of RE/MAX of Southern Africa.

Gordhan announced in his maiden Budget speech today that the government would co-operate to find ways to address a key gap in the housing market, that middle-income earners cannot access financing to buy homes.

This follows the announcement by President Jacob Zuma in his State of the Nation address last week, that a guarantee fund of R1-billion would be set up to incentivise the private banking and housing sector to develop new products to meet the massive demand for formal housing.

 “Whatever measures that government introduces, that are positive in nature and assist people to afford to buy their own home, are important and should be supported,” says Gilmour.

“It is encouraging to see that government is taking a step in the right direction in terms of assisting South Africans to access home loans, but I think that this probably needs to be taken further than what is currently envisaged.

“For example, the $8 000 tax subsidy that the US government recently introduced has strongly encouraged house-buying in that country over the past nine months, accounting for between 30-40% of house purchases. This has had a significantly beneficial effect, putting the US economy on the road to recovery.”

In addition, Gordhan announced that the global financial crisis showed the need for central banks to take a broader view of the economy in managing inflation, and for the SA Reserve Bank to be more flexible regarding inflation-targeting, to keep interest rates stable.

“This move, too, should be supported,” says Gilmour. “With less volatility in interest rates, the housing market becomes more stable and home-owners are more easily able to service their mortgage debt over the long term.”


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