South Africa’s Budget 3.0, tabled this week following months of political negotiation and fiscal reworking, brings with it a blend of relief, realism, and renewed responsibility.
“While I welcome the fact that we avoided a VAT increase, this budget does signal some underlying challenges that could temper market momentum. One of the most sobering updates in this re-tabled budget is the revised GDP forecast of just 1.4% for 2025, down from the earlier projection of 1.9%. This weakened outlook inevitably affects consumer confidence and employment prospects – two essential drivers of real estate demand,” Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa notes.
Another downside is the proposed fuel tax increases which will go towards the shortfall left by the cancelled VAT hike. “Although this measure is more targeted than a blanket VAT increase, it still filters through to household budgets. Rising fuel costs increase the cost of transport, food, and services – all of which erode disposable income. This means less room in the budget for mortgage payments, maintenance, or savings for a deposit and / or transfer costs,” says Goslett.
Apart from these factors, Goslett is also concerned about the scaling down of modernization funds for Home Affairs. “This could have very real implications for the property market. Home Affairs plays a pivotal role in property transactions. Delays or inefficiencies in this department can slow down transactions, frustrate cross-border investment, and erode confidence in the ease of doing business in South Africa. Modernizing Home Affairs is not just a tech upgrade – it’s a vital component of making our property and financial systems more agile and trustworthy,” he notes.
Despite these concerns, Goslett wants to acknowledge the effort made by National Treasury to present a measured and politically workable budget. “The property sector thrives on policy certainty, consumer confidence, and economic momentum. Budget 3.0 offers some of that – but the warning signs in the macroeconomic data remind us that we’re not out of the woods yet,” he states.
“For our industry to flourish, we need to go beyond avoiding harm. We must create the conditions that enable more South Africans to become homeowners. That means continued infrastructure investment, service delivery improvements, financial sector confidence, and administrative efficiency. This new budget offers some hope in this regard, but I will be watching closely over the coming months to see how these fiscal plans are implemented,” says Goslett.
Looking beyond our borders, Goslett also remains hopeful that the upcoming meeting between President Cyril Ramaphosa and U.S. President Donald Trump will bear positive fruit. “Strengthening diplomatic and economic ties with major global players is crucial for positioning South Africa on a better growth trajectory. If this engagement leads to enhanced trade relations, investment flows, or renewed confidence in our economy, it could serve as a much-needed boost — not only to the broader economic outlook but also to sectors like real estate that are so closely tied to investor sentiment and stability,” he says.
Yael Geffen, CEO Lew Geffen Sotheby’s International Realty:
The good news is no VAT increase. The bad news is that the fuel levy is rocketing to make up for the dosh the government’s not going to squeeze out of the suffering populace in the shops. If middle class car owners were intended to take the brunt, bad news. Those who’ll be hardest hit are South Africans using public transport.
Geffen says the greater question regarding the budget is why deliver the speech today and include a grim economic forecast just hours ahead of President Cyril Ramaphosa’s landmark meeting with US President Donald Trump, that could change our economic outlook in an instant? The ruling party should have thought of that. Clearly, that joined up thinking wasn’t in the corridors of power.
Milestone collaborative National Budget for SA
Dr Andrew Golding, chief executive of the Pam Golding Property group
Today is an important milestone for South Africa with a far more collaborative and non-controversial National Budget 3.0 tabled in Parliament.
Welcome commitments made in the Budget Speech refer to: growing the economy – a key element of job creation, accelerating infrastructure investment and facilitating greater private sector participation in public infrastructure, tackling corruption, and eradicating wasteful and inefficient expenditure while investing in our frontline services - including free basic services for poor households.
Much to the relief of consumers, as recently announced, the proposed VAT increase has been removed in the revised Budget. This is also encouraging for home buyers acquiring new-build units in property developments which incorporate VAT in the purchase price, as well as first-time and other home buyers embarking on property acquisitions as there are a number of VAT-inclusive services associated with the purchase of a home.
Positively, the Budget has retained the 10% increase in the threshold for transfer duties, which means that properties up to R1.21 million are exempt, which is meaningful for first-time buyers as the average price paid by a first-time buyer from January to April 2025 was R1.245 million, according to a home loans provider.
Regrettably, the fuel price levy increases in June by 16 cents per litre for petrol and 15 cents for diesel, however, on the plus side, this is hopefully offset by indications that fuel prices will decrease by an estimated 23c per litre next month (June).
It is also unfortunate that allowance has not been made for tax bracket creep to allow for inflation, as in effect, this results in higher tax being paid by individuals who are pushed into higher tax brackets.
Amidst a muted local economy faced by various global headwinds, it is extremely encouraging for homeowners and investors that the recovery in national house price inflation (HPI) continues, with the Pam Golding Residential Property Index for HPI rising to 7.2% in April 2025 from year-earlier levels. For the year to date, national house price inflation has averaged 6.4% which is double the average for the whole of 2024 (3.2%).
With consumer inflation remaining anchored just below the lower limit of the current inflation target - at 2.8% in Apr'25, the real (inflation-adjusted) Pam Golding Residential Property Index rose to 4.4% in Apr'25 – the highest recorded since August 2007 - having averaged 3.4% year to date.
The Western Cape remains the leading province, with house prices rising by 7.3% in April from year-earlier levels. Encouragingly however, the recovery in house prices in both Gauteng and KwaZulu-Natal continues to gather momentum - rising by 5.4% and 4.8% respectively last month (April).
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