Jo’burg property rate increases set to bite hard
Category Blog
Home ownership in the City of Johannesburg seems set to become less affordable. Not least so for cash-strapped first-time and single-income buyers and owners, as well as pensioners.
This is due to the unexpectedly steep increases in property values – some as high as 80% plus – that the City is determined to enforce with effect from 1 July in terms of its latest 2018 property Valuation Roll. These latest valuations can be queried and challenged online at the following address: www.eservices.joburg.org.za. A municipal valuation that is market related now is likely to be way below market value in four years time.
Unfortunately, the timing is poor. And it is clearly not good for home market sentiment, coming, as it does, after a languid performance in the residential property sector over the past eight years.
However, it’s important to note that these municipal valuations occur every four years. And therefore, be aware these valuations once queried could be adjusted upwards if true value exists.
The market was hamstrung during that period by the consistent economic, political and social uncertainty that prevailed under the Zuma presidency. Affordability of home ownership – both existing and aspirant – became a challenge as the then scourge of persistent ‘State capture’ virtually brought the economy to its knees.
A squeeze on affordability
Now, home ownership affordability in Johannesburg is about to be squeezed even more tightly by the seemingly extraordinarily high municipal rates increases that are poised to come into effect mid-year. Worse still, they will come on the back of South Africa’s first increase in Value Added Tax (VAT) since before the dawn of our democracy!
So, it’s a double whammy – not least for first-time buyers, single-salary family owners and cash strapped pensioners. (It is ironic that the 1% higher VAT rate will become effective on April Fools’ Day!)
As the City’s new Valuation Roll begins to take hold, and inflation remains a restraining factor, more and more homes could start appearing on the market as declining affordability sets in.
Faced by a City Council that is loath to compromise on its new valuations, some homeowners will simply be forced to sell and buy lower.
A property nirvana
In doing so, those forced sellers could collectively create an unexpected flow of properties onto the market. This would clearly have an impact on pricing – particularly if it results in an oversupply of homes for sale. Chances are that may well happen. For first time buyers with the wherewithal, this could be nirvana!
Meanwhile, today’s prospective buyers must factor in the fact that the house they fancy could now cost an extra R2000 to R4000 a month to maintain.
Author: Ronald Ennik
