2012 National budget, a positive impact on property market

Adrian Goslett

The 2012 budget speech, delivered to Parliament by Finance Minister, Pravin Gordhan, is encouraging for further sustainable economic growth and improvement, which in turn will have a positive impact on and spin off for the property market.

One of the key drivers will be increased job creation, as the more people who have gainful employment, the more people who will be able to qualify for home loans and therefore be able to purchase property – an aspiration of every South African – especially in light of the mortgage support programme, as mentioned by President Zuma in his State of the Nation address, as well as proposed reforms to reduce the cost of banking, especially in terms of savings and investment products, in the near future.

The more that South Africans are able to manage their levels of debt and develop a strong culture of saving, the better off for property industry and the economy as a whole. In fact, developing a culture of saving is so important to government, that a tax incentive to encourage savings is under consideration. This includes tax exemption on certain short and medium term savings of up to R30 000 per year and R500 000 in a lifetime.

Added to this, it was announced that there would be a modest personal income tax relief to a total of R9,5billion, particularly aimed at those at the lower end of the salary spectrum who earn R200 000 per annum or less.

The positive contributions that the budget will make to these areas of the economy, along with the other budget allocations to infrastructure development, housing subsidies and the new cities support programme, can only be of benefit to the South African economy as a whole, and in turn, the property market.