Consumer confidence remains high
Strong income growth and rising employment in poor households proved to help consumer confidence in South Africa peak after the second quarter of this year.
Rising interest rates and the tough new credit rules that were introduced last month could have an effect on healthy consumer demand but continued strong household income growth will support consumer spending.
Increase in alterations and decrease in building of new homes
According to Statistics South Africa, there are two trends to emerge in the housing market. The first being the slowdown in the construction of new housing, and the second is that there is an increase in alterations and additions to existing homes.
The changing conditions in the property market are being put into perspective for CEO of the ERA South Africa property group after figures were released by Statistics South Africa. More homeowners are bringing about alterations and additions to their existing properties, many with a view to achieving a better selling price. The market is also moving into a stable state where developers are a little more wary about the number of new units they bring to the market.
Stamp duties reduced
Stamp duties on fixed property leases have been reduced in the latest amendments by SARS during May this year. Stamp duty on short-term leases has been abolished and duty on longer-term leases has been capped.
Sapoa and its Property Management Committee have been lobbying with SARS for a while to reduce stamp duties. The outcome is that leases with a term of less than five years will no longer need to be stamped at all. Stamp duty will also be limited to 8% of a property’s market value, ensuring a ceiling on the stamp duties payable on long leases.
New Johannesburg rates system to be implemented next year
From July next year, new property rates will come into effect, which will cost the city council R18m to implement. This is part of a national standardised rating system in terms of the new Municipal Property Rates Act.
The new rates system requires that all municipalities rate property on the combined value of land and improvements and is the most extensive change to the taxation system of local government in recent years. Only the value of the land was used to assess city property owners in the past.
Demand for residential property goes up
The top-end of the global property market is likely to see double-digit house price growth in 2007 as the growth in wealth among the rich is boosting demand for residential property investments across the globe.
New challenges for property developers
The new National Home Builders Registration Council’s (NHBRC) code of conduct is creating havoc under property developers. NHBRC is a council set up by government to protect the interest of housing consumers and regulate the home building industry. It has a new code of conduct that appears to favour property consumers.