Comments below by Dr Andrew Golding, chief executive of the Pam Golding Property group
Consumers have reason for cautious optimism ahead of the 2026/27 National Budget. A steady stream of encouraging economic indicators, including subdued inflation, sustained rand strength, lower fuel prices and the prospect of further modest interest rate relief, has helped ease cost pressures across the economy. Together with a gradual improvement in economic momentum, these developments are supporting a gradual recovery in household finances, particularly within middle-income segments, which bodes well for South Africa’s housing market.
Recent domestic milestones have further strengthened the country’s risk profile. These include the adoption of a lower inflation target, a credit rating upgrade, removal from the Financial Action Task Force grey list, and a well-received 2025/26 Budget. Collectively, these measures have contributed to lower borrowing costs and improved investor confidence. Globally, firmer commodity prices - especially precious metals - have underpinned the rand and bolstered government revenues, while improving global risk appetite has helped revive investor interest in emerging markets.
Despite this positive backdrop, fiscal pressures remain significant. Structural constraints have yet to be fully resolved, and while recent policy messaging, including commitments in the State of the Nation Address to strengthen the criminal justice system and address the national water crisis, signals intent, implementation of long-term reforms remains gradual. For the housing market, where sentiment plays a pivotal role, reassurance will be key. The Budget must reinforce fiscal discipline, entrench the moderation in inflation, and maintain a macroeconomic environment conducive to further interest rate relief and sustained investor confidence.
One measure that would materially assist consumers, including prospective homeowners, would be some relief from bracket creep. The 2026/27 Budget is likely to reflect stronger-than-anticipated tax revenues, driven largely by improved corporate profitability rather than broad-based economic expansion. Elevated precious-metal prices, improved electricity supply and logistics performance, as well as a stronger rand and lower borrowing costs, have lifted corporate earnings above Treasury’s conservative projections.
However, even with a modest revenue buffer, fiscal pressures persist. A rising public wage bill, financially vulnerable state-owned enterprises and growing social expenditure continue to constrain fiscal flexibility. Economic growth remains insufficient to significantly expand the tax base, requiring Treasury to balance deficit consolidation with social and political considerations. There is increasing consensus among analysts that further tax increases could prove counterproductive, potentially dampening revenue rather than enhancing it.
For the housing market, the Budget’s influence is largely indirect but nonetheless significant. The trajectory of interest rates - determined by the South African Reserve Bank but influenced by fiscal policy - remains the most important variable. A fiscally disciplined Budget that avoids inflationary spending and demonstrates commitment to debt stabilisation would strengthen the case for additional rate cuts later in the year.
Tax policy changes affecting property are expected to be limited. Transfer duty thresholds are unlikely to be adjusted, particularly given that the zero-rated threshold was increased to R1.21 million on 1 April 2025. Unfortunately, Treasury has limited scope to forgo revenue in the current environment.
Where the Budget may exert more tangible influence is in municipal finance and infrastructure. Property values in South Africa are increasingly shaped by the quality of local governance and service delivery. Encouragingly, Treasury has intensified oversight of distressed municipalities, redirected conditional grants where necessary and advanced efforts to professionalise local financial management. While substantial new funding allocations are unlikely, incremental improvements in governance and service provision could meaningfully bolster property market confidence.
Overall, the most plausible outcome for the 2026/27 Budget is a prudent, credibility-focused framework designed to reassure markets without triggering political tension. The housing sector will continue to be shaped more by macroeconomic stability and municipal performance than by direct fiscal intervention.
In practical terms, a disciplined Budget could help reinforce the conditions necessary for lower interest rates later in the year. Should Treasury maintain its consolidation path and the global environment remain supportive, the Reserve Bank would have greater scope to ease policy - a development that would likely do more for housing affordability than any targeted fiscal measure.
The property market is therefore expected to continue to reflect differentiated performance: resilience in well-governed metros, stability in the affordable segment underpinned by subsidies, and selective growth in municipalities demonstrating measurable improvements in service delivery. A credible and disciplined Budget could provide the housing sector with sustained confidence that the macroeconomic environment is gradually turning in its favour.
All comments above by Dr Andrew Golding, chief executive of the Pam Golding Property group
For further information visit www.pamgolding.co.za
