Finance Minister Enoch Godongwana has a huge responsibility of presenting a budget in the midst of serious expectations from citizens and the business community.
What are the expectations?
The country desperately needs a pro-growth budget aimed at returning the economy to a growth trajectory. We would also like to see the interest rate come down again so that the property market can be reignited, says Samuel Seeff, chairman of the Seeff Property Group.
This will require a containment of costs, especially those resulting from the Eskom-energy crisis. It is therefore vital that urgent measures are taken to stabilise Eskom and the energy supply. We also need to see investment into infrastructure maintenance and development, essential for economic growth.
Aside from the government intervention, this must be a budget which encourages local municipalities to take a bigger role in alleviating the pressure of power outages through measures such as taking traffic lights off the grid, whether with solar or back-up battery systems.
Importantly, we would like to see tax breaks for solar and alternative energy solutions for households as well as businesses as an urgent boost to keep the economy moving. More funding to combat crime and corruption is also vital, including proper and efficient mechanisms and staffing.
For the housing market, Seeff says that the house price threshold for exemption from Transfer Duty should be increased as it has been R1 million for over two years.
Transfer duty also needs an overhaul to reduce transaction costs, especially for first time buyers, but also for the price bands above R5 million where an increase in sales volumes can generate significantly more income for the economy and fiscus. You have to sell many more homes at R1 million to generate the direct and indirect economic benefits that a R10 million or R20 million-plus sale does, he adds.
As we have seen during the Covid-induced low interest rate period of the 2020 to early 2022 period, providing measures which boost the property market can result in a significant economic boost. This resulted in transaction volumes and values traded over the last two years (2021 and 2022) being the highest on record.
Even with the aggressive rate hikes last year, based on Lightstone data, the housing market still ended on the second highest level. Both the number of transactions (269,660) and total value (R348.4bn) for 2022 was topped only by the highs of the 2021-year.
Writer : Gina Meintjes