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Property 24/10 - 541
25 February 2021 00:00
This week on Property24.com: Inner-city revitalisation - 3 trends shaping SA's urban residential property; Online auctions - dos and don’ts for sellers and buyers; and where have all the tenants gone?
Budget 2021 | Households under pressure can put R2.2bn tax relief to good use
Finance Minister, Tito Mboweni presented the 2021 Budget under challenging Covid-19 Pandemic circumstances, with his focus sharply on economic recovery, relief for households and South Africa’s vaccination programme.
Property industry experts however believe the backtracking on an R40bn increase in personal taxes proposed last year was crucial, with the minister instead providing R2.2 billion in tax cuts. The 5% adjustment in the personal income tax brackets is expected to combat fiscal drag and provide targeted tax relief for lower and middle-income households.
While Capital Gains Tax and VAT remain unchanged, consumers and household budgets will need to absorb increases such as the 15.63% electricity hike from 1 April. A sharp 26c per litre increase in the fuel levy is also expected to eat into household budgets and offset some of the personal tax savings provided.
Inner-city revitalisation | 3 trends shaping SA's urban residential property market
During the Covid-19 pandemic, property stocks, in general, took a significant hit where retail and commercial office space - and even some industrial property holdings were affected. In contrast, lower-income affordable housing - and inner-city housing in particular has performed better than most other property markets in South Africa over the same period.
“Changes in the way we work, which were catalysed by the pandemic, as well as South Africa’s urban densification imperative are some of the trends driving this performance, says Paul Jackson, CEO at Trust for Urban Housing Finance (TUHF).
Jackson shares his views on the trends shaping urban regeneration in South Africa, and boosting the residential property market in inner cities.
1. The urban densification imperative
Urban densification is a national imperative. It is happening, as part of a natural demographic trend that happens as countries develop. It is also happening at a much larger scale than people may believe. According to the Centre for Development and Enterprise (CDE), 70% of South Africa’s population will be urbanised by 2030, with more than 60% urbanised already.
Negative rental escalation | Where have all the tenants gone?
The state of South Africa's economy, coupled with an onslaught of permanent or temporary loss of income means many South Africans are facing some significant financial pressures - impacting the rental market both from a rental price as well as vacancy perspective.
“Tenants are feeling financially vulnerable,” reports Michelle Dickens, CEO of TPN Credit Bureau, adding that 75% of tenants surveyed reported a loss of income during the lockdown. A recent TPN Tenant Survey conducted at the beginning of 2021 found that nearly one in ten tenants confirmed a permanent loss of income, while 12% of tenants received no income for a limited period but are now back to earning their full salary, and 50% of tenants received only partial pay for a temporary period. Only 25% of tenants confirmed their income was unaffected during lockdown.
Vacancy rates are trending upwards to 12.9%
At the same time, reveals Dickens, the TPN Vacancy Survey shows that vacancy rates are trending upwards to 12.9% as tenants retreat to family and friends to recover financially. In a blow to residential housing landlords but providing some respite for tenants, negative rental escalation has arrived. According to the specialised credit bureau's research, residential rentals were -0.75% cheaper on average for the last quarter of 2020.
Online property auctions: Dos and don’ts for sellers and buyers
Buying and selling property via online auctions is becoming far more commonplace. Ensure you have done your homework, researched the market and viewed all available information on the property before bidding. Follow this advice before you get started.
Buying property on Auction can be daunting and a slightly emotional experience. But it is also a convenient, effective and transparent process, says MC du Toit, CEO for BidX1 South Africa. He shares the following useful tips for sellers and buyers of both residential and commercial property: Tips for sellers
Listen to the market. BidX1 offers the seller analytics on their property which will allow him/her to see exactly what the feedback is from interested buyers. As there are limited buyers, particularly in the current market, ensure you take this into account when considering an offer.
“I always advise sellers to try to distance themselves from the emotional aspect of selling their properties. This is easier with commercial property, but in selling residential property, for example, your home, it is probably even more important. Once you have achieved a sense of impartiality and tried to view your home with objective eyes, ask yourself what you would pay for the property,” says Du Toit.