In his Budget 2020 speech on Wednesday, Finance Minister Tito Mboweni announced that transfer duty will no longer apply to properties that cost R1 million or less.
Previously the threshold was R900 000.
The change significantly reduces the financial burden on those looking to enter the market, says Carl Coetzee, CEO of BetterBond.
"It's encouraging for the economy at large too, as property investment serves as an important barometer for the fiscal health of a country," he adds.
Dr Andrew Golding, CE of the Pam Golding Property Group, agrees that some of the primary beneficiaries of Budget 2020 are first-time homeowners.
First-time buyers currently account for about half of all mortgages facilitated by ooba, and affordability has tended to dampen potential demand, explains Golding.
The average price paid for a home by a first-time buyer broke the R1 million barrier for the first time ever at the beginning of the year – at R1 001 275.
Since affordability is currently a key driver in the residential property market, Golding expects Mboweni's increase of the tax-free transfer duty threshold will help stimulate property transactions in the below R1 million price band.
In the view of Samuel Seeff, chair of the Seeff Property Group, the transfer duty change should not only boost the market for first time buyers, but also the low to mid-market sector of properties to about R1.8 million.
He says this is currently the most active segment of the market, supported further by a favourable mortgage granting climate.
"We see the current market as offering outstanding conditions for buyers. It is easier to obtain mortgage loans and the banks are granting higher bonds, especially for first time buyers," says Seeff.
"There is now more stock to choose from and generally, sellers have become more negotiable."
Seeff expects price growth to remain tight around the 4% range.
"Sellers in the low to middle-income price ranges to about R1.5 million are likely to see higher price growth, but above that, it will be highly area dependant. Upper end property above R5m is likely to continue seeing flat price growth," he adds.
Adrian Goslett, director and CEO of RE/MAX of Southern Africa, says Mboweni's confirmation that government will soon allow those municipalities that can afford it the opportunity to purchase electricity from the private sector, bodes well for both the property market and the country as a whole.
Crispin Inglis, CEO of PropertyFox, also agrees that transfer duty change will give many an opportunity to get a foot in the property door, ramping up opportunities for first-time buyers, especially.
"This, in turn, could have an important impact on a pervasively stagnant property market," he says.
For David Jacobs, Gauteng regional manager for the Rawson Property Group, affordability and consumer confidence are the key issues in real estate and Mboweni's Budget 2020 addresses both.
"In the first place, the increase in the transfer duty threshold and the R14 billion worth of income tax relief that were announced will put more money in consumers' pockets. That will make it easier for potential buyers to afford the homes they want and qualify for the home loans they need," says Jacobs.
"This will add impetus to a market that is already benefiting from relatively low inflation, declining interest rates and competition among the banks for new home loan business."
Berry Everitt, CEO of the Chas Everitt International property group, says the transfer duty change will also have a positive impact for banks, as it will "enable them to offer even better loan interest rates in their current keen competition to acquire new borrowers".
Source: Fin24