There has never been a better time to buy than now, says Also's executive sales manager

Lew Geffen, chairman of Sotheby's International Realty in SA says Finance Minister Trevor Manuel is to be commended on Budget that is a neat balancing act between the demands and needs of the poor on the eve of an election and the need for restrained borrowing and spending to protect SA from the worst effects of the global financial crisis.

"Mr Manual has once again sent out an encouraging message to local and foreign investors that SA's fiscal affairs are soundly managed and we believe he can truly be rated as the best finance minister in the world, delivering an incomparable performance on behalf of all South Africans. It is his careful approach over the past few years which has made it possible for government now to allocate significant resources to projects that will help to create jobs in SA, at a time when they are most needed.

"As to specifics, the proposed spending on infrastructure, social development and rural upliftment are all positive from the property point of view, even if only in the long term. But we would concur with the Mr Manuel's speech to ensuring that the money allocated is spent and spent correctly, because at the moment many very worthy projects are hung up at the delivery stage."


Berry Everitt, CEO of Chas Everitt International says that the budget is a "fair one" and bodes well for the year ahead, particularly for the property sphere in that it should boost investor confidence.

"The personal tax relief of R13,5bn will do much to relieve pressure on the consumer. This factor, coupled with falling inflation and interest rates, will also have a spin off effect in that existing home owners will be able to cope far better with their existing debts and bonds. It will also take the pressure off those who might previously have sold their properties too quickly.

"The incidence of forced auctions and bad debt for the banks will also probably lessen, thereby jumpstarting a more positive lending cycle once more. Make no mistake the year ahead will be a tough one and the real estate industry will have to consolidate but things are definitely looking up. It's just a pity that Mr Manuel didn't make any transfer duty cuts!"

The fact that the Minister has allocated R787bn for infrastructure over the next five years will also do much to bolster prospects, adds Everitt. "Finance of this nature will create jobs which will ultimately feed into the property market.

"And from the point of view of property buyers, Mr Manuel emphasised the fact that bank lending policies have proved sound and that they should continue extending credit to "worthy clients". In other words, potential buyers will have to continue to fulfil the requirements as set down by the strict lending protocols which have been enforced thus far."


Homenet CEO Martin Schultheiss says: "This Budget should be an excellent confidence booster for the man-in-the-street, which bodes very well for the property market down the line.

"Investors both local and foreign should take note of the fact that, at a time when other countries are only thinking of plans to boost their economies, SA already has extensive public expenditure programmes up and running that are creating new jobs and helping to alleviate poverty. "At this difficult time for the global economy, to be able to allocate R45bn to the provinces to improve education, health services and infrastructure, and another R11bn to the municipalities for housing and improved services is remarkable, and indicates real commitment to improving the quality of life for ordinary citizens. One must remember that this comes on top of the current colossal spending on national assets such as harbours, airports and main roads, and on facilities for the Soccer World Cup in 2010, with the associated job creation."

Then in addition to this, he says, Mr Manuel has found R12bn for social grants to improve the lives of children, the elderly and the disabled, and R13bn for taxpayer relief.

"Taken together with declining inflation, falling interest rates and increases in disposable income, these measures should soon bring about a rise in consumer confidence that will further fuel economic recovery and, in turn, home buying and building on a much expanded scale.

"A home is still the most desired asset among most consumers and as an investment, property has proved its long-term worth again and again."


The "no real surprises" Budget means the property market will not receive the mild boost it deserves as an engine of growth for the economy says CEO of ERA South Africa property group Gerhard Kotzé.

With no reduction in transfer duty, The Budget fails to reduce entry costs for home ownership, one of the major impediments to sectoral recovery, he notes.

On the other hand, on-going infrastructure expenditure is clearly positive for the property market and SA is notable for being one of the few countries in the world able to provide economic stimulus of this nature right now.

Also, increased government spending will offset to a large extent the decline in private sector fixed investment and that's obviously good news for property in general.

"The overall effect of the Budget will be to steady the nerves of consumers and business alike and we have much for which to be thankful, including our relatively small Budget deficit, the improved outlook for inflation, softening interest rates, strong banking sector and steady (for now at least) currency, all of which creates a sound environment for property in the medium to long term.

"Of concern however is that Mr. Manuel failed to address issues specific to the property sector industry including still rising building costs, shortages of materials and skills, questionable building standards and long planning delays.

"We should be using the quiet times of the moment to sort these matters out, but they require interventions at central, provincial and municipal level."

Also there has evidently been no progress on proposals that have apparently been bandied about for some time now, of tax relief for small property developers which could help to bring less expensive homes to the market. In this respect SA could take a leaf out of the book of the UK for example, where incentives for small companies formed part of the Government economic rescue packages.


Dr Willie Marais, national president of the Institute of Estate Agents, says the Budget can be categorised as "careful" and contains nothing of real excitement for the real estate industry, although this is a major contributor to GDP.

"We were disappointed that there was no reduction in transfer duty, although we do recognise the increased threshold for capital gains tax as a step in the right direction.

"The increase in the VAT threshold from R300 000 to R1m may also bring some relief to small operators in our industry, although it is fraught with technical difficulties when one considers that various agents working on the same transaction may each have a different VAT status, and that the VAT status of home sellers may now be different from that when they purchased a property.

"Probably the most encouraing thing for us was Mr Manuel's remarks concerning the SA banking sector which he emphasised was very sound, unlike those in many other countries. And we would like to add our voice to his in urging the banks not to been too credit shy but to 'continue to lend to worthy clients', as a lack of mortgage lending is currently our biggest concern."


Young Carr, CEO of Aida National Franchises has welcomed the Budget. "As expected, there were no fireworks, but Minister Manuel's budget confirms that our economy is on a stable footing, in contrast to many others around the world.

"This, coupled with the welcome news of increased spending on infrastructure and social development will underpin the local property market in future.

"People will always buy and sell proeprty and supporting social infrastructure development will ensure that more consumers will be enabled to enter the market on a sustainable basis.

"The emphasis on rural and agricultural development is enouraging in this respect as this will strengthen far-flung rural communites and by extension, support rural property markets.

"Discipline in our financial industry has stood the country in good stead and as Minister Manuel pointed out, our banks are in a position to continue lending to responsible consumers, including property buyers."

 

 

Article by: www.era.co.za