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The budget speech: 5 Things that affect first-time homebuyers

In a year of loadshedding and rising fuel prices, the budget speech is especially pertinent. Here are some significant announcements for first-time homebuyers.

Budget speech property market

Article summary

  • The budget speech did not include significant changes to transfer duty or taxes on property purchases.
  • The government announced billions worth of investment in infrastructure and job creation.
  • Unrelated to the budget speech but a source of encouragement for first-time homebuyers is the predicted cuts to the interest rate.

Every year, property investors pay keen attention to the budget speech and its ramifications for the property market.

This is especially significant in a year beset by loadshedding and rising fuel prices.

Here we discuss some of the key announcements as applies to first-time homebuyers.

1. Transfer duty

Transfer duty is one of the additional costs homebuyers pay on the purchase of a property, so the implications of the budget speech need to be taken into account.

You can use our Transfer Cost Calculator to determine what you will pay on transfer costs, bond registration, and transfer duty.

Transfer duty remains the same as it was last year. Properties purchased for less than 

R1 100 000 remain exempt from transfer duty.

Transfer duty brackets remain as below:

Value of property (R) Rate
0 – 1 100 000 No transfer duty
R1 100 001 — R1 512 500 3% of the value above R1 100 000
R1 512 501 – R2 117 500 R12 375 + 6% of the value above R1 512 500
R2 117 501 – R2 722 500 R48 675 + 8% of the value above R2 117 500
R2 722 501 – R12 100 000 R97 075 + 11% of the value above R2 722 500
R12 100 001 and above R1 128 600 + 13% of the value above R12 100 000

2. Taxes

There are no tax hikes for this year, which will be a relief to first-time homebuyers.

Estate agents were hoping for a cut in Capital Gains Tax but this did not manifest.

Rhys Dyer, CEO of ooba Group, provided the following summation of the tax situation:

“While middle and lower-income earners are largely shielded from tax increases, the upper end of the market may still be impacted by bracket creep, which could burst the surprisingly strong bubble the luxury property market has been in since the start of the COVID-19 pandemic. Bracket creep is a phenomenon seen in high inflationary environments, where inflation pushes income into higher tax brackets, reducing the purchasing power of higher-income earners.”

He expressed disappointment that there was no increase in the transfer duty exemption rate, but homebuyers still benefit from the 2023 increase to R1 100 000.

3. Solar installations

As of 2023, households that invested in solar installations received 25% of their investment back as tax credit.

Sadly this expired in February 2024 and there appears to be no intention to extend it.

4. Investment in public infrastructure

The government announced plans to invest R943 billion in the refurbishment, maintenance and building of public infrastructure.

Debt relief for Eskom will be contingent on them being more open to private-sector partnerships.

This is a positive development as improved infrastructure, especially pertaining to loadshedding, will make property investment more lucrative, and provide greater choice for first-time homebuyers.

5. Investment in job creation

The government announced an investment of R62 billion over the next three years for job creation programmes.

This is good news as it will expand sources of income and make homeownership a more viable prospect, encouraging an increase in first-time homebuyers.

In summation:

The budget speech for 2024 appears to have kept things mostly the same, which is both good and bad news. No extension of the transfer duty threshold or decrease in Capital Gains Tax will disappoint first-time homebuyers, but at least there was no increase in taxes.

Interest rates

Not necessarily related to the budget speech, but a source of encouragement to first-time homebuyers nonetheless will be predictions regarding the interest rate.

The past few years have seen interest rate hikes as the South African Reserve Bank sought to account for inflation.

But the decision to keep interest rates the same in September 2023 indicated that these hikes may come to an end, and experts even predict interest rate decreases as early as May 2024.

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Whatever the movements of the property market, prequalification remains one of the most effective ways to secure homeownership.

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This serves as proof to the bank that you can afford the home loan, and enables you to budget more effectively.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.

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