Budget speech: Impact on real estate
Jan Davel, Managing Director of the RealNet Estate Agency Group comments on the budget speech which was given yesterday by Finance Minister, Pravin Gordhan.
Davel says: "It is clear from yesterday's Budget that Finance Minister Pravin Gordhan is committed to keeping SA's economy in the fighting trim which has enabled it to withstand the global economic storms of the past few years, and this bodes very well indeed for the country's real estate industry.
"Although he acknowledged during his speech that the ongoing economic crisis in Europe had forced him to cut his economic growth forecast for this year from 3,4% to 2,7%, the Minister also made the point that advanced economies were only expected to achieve growth of 1,3% this year, and the much vaunted Asian region overall growth of just 7%. At the same time, it is important to note that while many other countries are battling huge deficits, SA's deficit this year will amount to just 4,6% of GDP, well below the 5,4% projects by economists."
Davel also says Mr Gordhan's obvious determination to combat corruption and control spending in the public sector while directing resources into much-needed infrastructure, training and capacity development will not only boost local taxpayers' confidence, but encourage large scale private sector investment and further job creation.
"And this is where the real benefits will lie for the real estate industry, as we will then have a growing pool of better qualified, higher paid individuals who are able to afford their own homes.
"What is more, those people will be living in a country where total public debt is under 40% of output - a level that more developed countries would love to achieve."