How the medium-term budget speech affects the property market

The latest Medium Term Budget Policy Statement (MTBPS), presented by Finance Minister Enoch Godongwana, reflects ongoing fiscal challenges for South Africa, including slower-than-anticipated economic growth. This is likely to have negative implications for the local housing market.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, explains that the rising cost of living, paired with the likelihood of delayed economic growth, may place added pressure on both first-time buyers and property investors in the near term.

Real GDP growth is forecasted at 1.1% in 2024, well below the estimate of 1.3% in February. However, Goslett is hopeful that there might be just enough positive opportunities coming off the back of this speech to help stimulate economic growth in 2025.

“The promises to open the freight rail network to private operators, and to continue to restructure and establish a competitive electricity generation market could have very positive implications for the economic growth of our country – provided that there is follow-through on these issues,” says Goslett.

Goslett is also positively optimistic about the promise to implement reforms that will allow for greater private sector participation, as he hopes that this will help improve service delivery restraints across the country.

However, government debt remains one of the bigger threats to our economy and Goslett fears that this budget speech falls somewhat short on addressing this concern adequately. South Africa has one of the highest government wage bills relative to GDP compared to most major global economies. “We need to see more action taken to reduce this expense,” says Goslett.

Overall, Goslett’s sentiments about the speech is that “although certain promises have the potential to stimulate growth and positively impact the local property market, other decisions missed the mark and are unlikely to achieve their intended goals,” he states.

Writer: Kayla Ferguson