Budget 2023
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Budget may help first-time home buyers

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Johannesburg - The increase of the transfer duty exemption for properties from R500 000 to R600 000 is welcome news, a property group chief executive said on Wednesday.

Herschel Jawitz, the chief executive of Jawitz Properties, said the increase announced by Finance Minister Pravin Gordhan in his 2011 budget would make a "meaningful" difference to first time buyers.

Jan Davel, MD of the RealNet property group, agreed, saying it was the "most obvious good news" for the property industry.

"The move is a surprise given that property prices have not really increased to the degree that would necessitate an inflationary increase in the threshold," Jawitz said.

"With regard to the overall budget, allocations to the areas that directly impact on property values such as policing and road infrastructure are very positive."

Jawitz said it was a clear indication that the government was aware of the issue of home ownership "especially for first time buyers".

He said the increase in the threshold meant that for a property of R600 000 and higher, the transfer duty saving would be R5000.

"For first time buyers this is a meaningful amount of money," he said.

Davel said lower income buyers would also benefit.

"This will bring significant relief to first-time and lower income buyers who generally have to come up with substantial cash deposits in order to secure home loans as well as the cash needed to pay transfer costs, bond registration and legal costs," he said in a statement.

It should also help to stimulate demand in the lower end of the market, which could have a positive knock-on effect on the middle and upper levels.

"In addition to this, the support that will be given to job creation in both the public and private sectors, especially to ensure that more young people are employed, will have enormous long term benefits for both the overall economy and the real estate sector," he said. Berry Everitt, MD of the Chaz Everitt International property group, also welcomed the emphasis on job creation "as increased employment is key to the survival and growth of the real estate and construction sectors of the economy".

The R8bn in tax relief for employed people and tax concessions for small and micro businesses were pleasing, Everitt said in a statement.

"We have for some time advocated tax relief for individuals as the best way to create jobs -- by increasing disposable income, stimulating demand for goods and services and promoting increased production that requires more employees."

Lew Geffen, chairperson of Sotheby's International Realty in SA, praised the Budget as "very balanced, inclusive and transparent".

He welcomed the commitment to keep inflation within the three to six percent target range until at least 2013, provided there were no shocks to fuel and food supplies.

"This will give the property sector time to consolidate the gains it has already begun to make, with sales activity having shown significant improvement since late last year, and 100% bonds beginning to come through again quite freely to borrowers in good standing," he said.

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