SA property in 2020: The low, realistic and high road scenarios
Over the last several years, provider of data, analytics and systems in the property and automotive industries, Lightstone, has accurately forecast residential house price inflation rates.
After the economic recession in 2008, house price inflation in the last decade showed lacklustre growth, only peaking at 6.35% at the end of 2014.
Fast forward to 2019 where house price inflation for the year ended just below 2%, and Lightstone’s ‘low road’ scenario was forecast at exactly 2%. According to Paul-Roux de Kock, analytics director at Lightstone, this is the first time that actual inflation came in under the low road scenario forecast.
The three scenarios
After starting the year off with negative GDP growth in the first quarter, De Kock says South Africans were desperately looking for an “economic silver lining” throughout 2019.
First-time home buyers get a boost as transfer duty threshold upped to R1m
Budget 2020 presented by the Minister of Finance, Tito Mboweni, has been broadly welcomed by Samuel Seeff, chairman of the Seeff Property Group. In particular, the raising of the transfer duty threshold to R1 million combined with the broader personal income tax relief is “welcomed for the property market”.
This should boost first-time buyers and the low to mid-market sector to about R1.8 million, which is currently the most active segment of the market, supported further by the favourable mortgage granting climate.
Seeff further welcomed the plans by the minister to lower the corporate tax rate and expressed the hope that a lowering of the Capital Gains Tax (CGT) and high-end property transfer duty rates will also be looked at to reignite the property market. Especially, he adds, the upper-end price bands which hold the propensity to generate significant property taxes and economic spin-off benefits.
The bail-out package for Eskom (and SAA) was expected and we are encouraged that this is not at the expense of higher property and personal taxes. We also welcome the various reform initiatives proposed, in particular those aimed at stabilising the SOEs and Eskom and making it easier to do business and invest in the country.
Ignoring tenant water usage poses significant risk to landlords
Managing utilities will be one of the top priorities of governments around the world for the next decade. South Africans are now living in a country where the provision of water and electricity is far from predictable and we must expect harsher regulations to curb wastage. For landlords – especially those with units in multi-tenant complexes and flats – understanding their obligations in an increasingly punitive environment is more important than ever.
“South African lawmakers are tackling both the culture of non-payment, as well as the need to manage the usage of electricity and water, by calling for the implementation of prepaid meters,” says Citiq Prepaid managing director, Michael Franze.
“While many know the benefits of electricity prepaid sub-metering, managing water supply with these systems is still fairly new. However, both local and national governments will be using their regulatory stick to ensure property owners and managers are toeing the line and, if not, they can quickly find themselves facing some stiff fines.”