Property experts want tonight’s SONA to address critical issues like load shedding, transfer duty, interest rates, and inflation. Picture: Magda Ehlers/Pexels
Tonight’s State of the Nation Address (SONA) by President Cyril Ramaphosa is going to be a critical one, not just for the country, but the property market.
This is because South Africa’s economic state and growth prospects have huge impacts on consumer and business confidence, which ultimately affects whether people feel safe enough to invest in large assets like properties.
Property experts are therefore hoping that both the SONA and 2023 Budget Speech offer a number of interventions to assist property buyers and homeowners.
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Some interventions include tax breaks for those who install solar and alternative energy features, a decrease in transfer duty and increase in the exemption threshold, and a solution to load shedding.
Samuel Seeff, chairman of the Seeff Property Group, says this is going to be a “critical” SONA, and that all eyes will be on whether President Ramaphosa will finally take the necessary steps to bring the country back on a growth path.
“We hope to see that he picks a Cabinet of competence rather than political convenience. Public service, in particular Eskom, needs critical attention because we simply can no longer wait; further economic decline and job losses will be disastrous for the country.”
He says inflation needs to be contained and with that, interest rates.
“The property market cannot afford further rate hikes. We need to see a stable interest rate and the potential of the rate coming down towards the end of the year.”
Other aspects Seeff is hoping will be addressed will be infrastructure spend, better roads, and traffic improvements, all of which will boost economic growth.
“We would also like to see municipalities step in and assist with keeping the local economy going, and getting the traffic lights off the grid or employing pointsmen. But we cannot have local municipalities simply sitting back and waiting for National Government to come up with solutions. It is time to see service delivery.”
Items also on his wish-list for SONA and the 2023 Budget Speech are no tax hikes, a reduction in transfer duty, and a rise in the entry level price for transfer duty exemption as it has not been adjusted for the past two years. Tax breaks for solar and alternative energy installations are also among Seeff’s wants.
However, unless the SONA paints a different picture for the current economy, Adrian Goslett, chief executive of RE/MAX of Southern Africa, says the current outlook leads him to believe that fewer property transactions are likely to occur this year and house price growth percentages will likely remain in the low single digits.
“Buyers will be affected by rising interest rates which in turn will have an impact on demand. In order to counter that, sellers will have to lower their expectations to realistic levels if they are to get their homes sold within reasonable time frames this year.”
He says the real estate market has always worked in cycles with medium-term peaks and troughs of seller markets versus buyer markets, and emphasises that real estate is a long-term investment.
“The key is understanding where you are at in that moment in time and making an unemotional sound financial decision based on that position.”
Goslett’s hope for tonight’s SONA is that there will be “less lip service” and more follow through on promises previously made to solve the issues facing the country. Load shedding is one of the “most pressing” concerns.
Similarly, Paul Stevens, chief executive of Just Property, says the biggest thing he, and many others, want to see from SONA is clarity on what the government intends to do to resolve the “crippling effect of the load shedding on the greater economy”.
“There is already a financially burdened population and Eskom has received approval for two years of extremely high power cost increases...We also need clarity on what the government is doing about allowing alternative energy suppliers to compete with state-owned Eskom.”
He says South Africa’s unemployment rate is “out of control” and so Government needs to create confidence that they will assist the private sector with means to grow their businesses and not constrain them with limited power supply at an exorbitant cost.
What has been positive over the past year though, is to see how the Government has started to take action on the corruption that the country is faced with.
“They need to ensure that they appropriately handle the cases and take the necessary action where needed. If our nation can have confidence in a government that is acting in a manner that’s in the best interests of the people, then we will start to see an improvement in our economy and, along with this, the property market that will follow.”
The energy crisis is a common and integral thread of everyone’s hopes for President Ramaphosa’s SONA, with Yael Geffen, chief executive of Lew Geffen Sotheby’s International Real Estate, saying that a rapid and sustainable solution to the energy crisis is desperately needed because the economy cannot recover or grow until this happens.
“We also want Government assurance that they have a firm plan to tackle the spiralling cost of living increases that are depleting people's remaining savings and stopping average families from being able to save for their own homes or their families' futures.”
Other items on her SONA wish-list include an “economic turnaround strategy that pays more than lip service, reduced government wastage, and a tangible crack-down on cronyism and corruption”.
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