From our MD: Property positives in Budget
Category From the Desk of the MD
This Budget definitely sends the right message in terms of the government's willingness to drastically cut State expenditure as part of an overall plan to bring down SA's debt and reduce the national deficit, according to our MD Gerhard Kotzé.
Also extremely important, he says, is the acknowledgement that SA's electricity sector needs to be completely restructured and the R230bn allocation to doing this over the next 10 years.
"Meanwhile the power grids are already being opened up to more independent producers big and small, while local authorities in good standing are now allowed to buy power from independents rather than Eskom. This will hopefully mean much less loadshedding soon, especially for business, which is the real engine of economic growth, employment and ultimately, tax revenue."
Kotzé says that taken together with significant moves to strengthen the agricultural sector, to enable the municipalities to deliver better basic services and to speed up the prosecution of those responsible for State capture and corruption, these initiatives should boost consumer and investor confidence in SA's economy and possibly stave off a credit rating downgrade by Moody's next month.
"That would underpin much faster economic growth and job creation, and expand the property market by enabling more people to buy or rent their own homes in due course.
"However, the economy is probably still in for a tough few years because of the money that will be spent on restructuring the State-Owned Enterprises and paying off their debts, and the resulting cuts in spending on government housing, health, education and public transport."
One immediate negative of the Budget is the 25c increase in the Fuel Levy form 1 April, which will push up transport costs across the board and especially for those who need to commute to work, he says.
"But there were also two really big plusses for real estate, namely the increase in the Transfer Duty threshold to R1m and the R14bn worth of personal income tax relief. These will really improve affordability for home buyers and will no doubt stimulate housing demand, especially at the lower end of the market."
Author: RealNet
