The South African national budget speech, delivered by the Minister of Finance, Mr Enoch Godongwana, took place on March 12, 2025. Property investors will need to navigate the challenges and opportunities presented in the speech. This post analyzes the South African budget speech, highlighting specific impacts on the property market.
Looking back on the outlook of South Africa and looking forward to 2025 Budget reforms
According to Dr Duncan Pieterse, Director-General of the National Treasury, “over the past nine months, South Africa has benefited from improved sentiment following the successful transition to a government of national unity and the stabilisation of electricity supply. But this optimism needs to be translated into more determined action and measurable results, specifically in the form of higher economic growth and improved living standards. The 2025 Budget proposes steps to achieve these outcomes.” (Source)
Tax changes affecting property investors
The South African national budget speech has made several major changes to tax laws and VAT rates.
The budget speech pinpointed certain tax adjustments, some of which will have a direct impact on property transactions and property ownership costs:
- Transfer Duty amendments: transfer duty fees on property sales have been adjusted according to inflation, which is fantastic news for investors! This affects property investors differently, depending on property purchase prices. (Source)
“Hidden among the swathe of tax hikes and adjustments to benefits, National Treasury has quietly proposed a 10% adjustment to the thresholds for transfer duties. This will mean that homes valued under R1.21 million will be exempt from having to pay transfer duties, which is up from R1.1 million before.” (Source)
- VAT increase: The South African VAT rate will increase from 15% to 15.5% on 1 May 2025 and further to 16% on 1 April 2026. This directly impacts property transactions, including property transactions involving VAT. It will increase costs for property investors and developers. This means strategy will be more important than ever, and IGrow Chartered Accountants is here to help with that!
- Personal Income Tax Brackets remain unchanged: the government did not adjust personal income tax brackets for inflation. This has led to “bracket creep.” This means, that as your salary increases due to inflation, individuals may enter higher tax brackets, yet they won’t earn more in real terms. Your purchasing power has not increased, yet you could pay a higher tax rate.
- Corporate tax stability: corporate income tax remains unchanged, offering a portion of inflation-related relief. This is welcomed by businesses tied to the property sector.
- No fuel levy increase: a major plus seen in the South African budget speech is that the fuel levy will stay the same. As a result, consumers will save around R4 billion. This helps stabilise transport and construction costs for property developers. This should have a positive ripple effect on the construction industry, as construction costs related to fuel won’t increase in 2025.
Infrastructure spending and its effects on property values
One of the major benefits outlined in the South African national budget speech regards the government’s mission to boost infrastructure.
Public infrastructure spending over the next three years, entails:
- R402 billion set aside for transport and logistics: SANRAL will push R100 billion, within the medium term into the national roads. Provincial government departments aim to reseal over 16,000 lane-kilometres of roads.
- Rail: PRASA received an extra R19.2 billion, to be used over the medium term. This will improve critical signalling upgrades to improve commuter railway services.
- R352 billion channelled into energy infrastructure: the Independent Transmission Programme will be launched to boost private sector involvement in the energy sector market. Proposals for multi-line transmission-related packages plus private sector projects will be integrated.
- R156.3 billion directed towards water and sanitation: large-scale drinking water dam projects will ensure a steady water supply for both municipalities and businesses.
- Alternative Financing: The national government announces its first infrastructure bond in 2025/2026. This will establish a credit guarantee to mobilise private capital.
These infrastructure investments on behalf of the national government will improve property values in areas of enhanced infrastructure. The infrastructure growth enhances the accessibility to service delivery. It also improves the reliability of these public services.
Local government reforms affecting property market stability
The local government budget will increase from R99.5 billion in 2024/2025 to R115.7 billion by 2027/2028.
Expected additional reforms include:
- Revenue services (such as municipal service delivery) are set to improve: water, sanitation, electricity, and refuse removal services will become more efficient and reliable.
- Performance-based grants: six of the eight metro municipalities have qualified for the Urban Development Financing Grant. This will result in the creation of improved urban infrastructure, which is great news for property investors in thriving urban areas.
- Government reforms such as “Operation Vulindlela (Phase 2)”: there will be a strategic review of local government structures, including the review of the institutional structure of local government. This will be seen in updates to the white paper on local government, to enhance government efficiency and accountability. (Source)
“These local government reforms should enhance rental property value. This is due to improved municipal services and the awarding of Urban Development Grant Funds to 6 of the 8 metro municipalities. Operation Vulindlela (phase 2), involving the assessment of local government structures for improved government efficiency and accountability is a drawcard. This affects all South African property investors positively, improving the value of long-term buy-to-let properties” – IGrow property investment strategies team
How will the 2025 South African budget speech affect the property market?
For property investors, the South African budget speech analysis presents challenges as well as opportunities.
In a move that directly benefits investors and homebuyers, the government has increased the transfer duty exemption threshold from R1.1 million to R1.21 million. This means buyers purchasing properties below this amount pay zero transfer duty, offering a saving of up to R3,300.
For higher-value properties, the benefits are just as significant:
- R1.5 million property – Similar savings
- R2 million property – Save R7,839 compared to last year
This change is a strong indication that the government is committed to stimulating the property sector, making it an excellent time to secure high-growth investments.
How will the 2025 South African budget speech affect property development opportunities?
Improved municipal services (to the transport, water and energy sectors) will boost property purchase demand in urban areas such as Johannesburg, Pretoria and Cape Town. View our latest IGrow investment properties in Gauteng and Cape Town.
The drive to restructure municipal revenue services could lead to better service delivery in general.
Public-private partnerships in infrastructure could provide new investment avenues for large-scale developers. This will also affect property investors owning 5 or more rental units in terms of Section 13 Sex Tax Act. These property portfolio owners will qualify for tax reductions on new buy-to-let properties that will come onto the market. (Source)
“The budget speech also highlighted new Public-Private Partnership (PPP) regulations that will streamline land release and encourage private investment in affordable housing projects. The key benefits of these initiatives include:
- Faster approval processes for property development projects.
- Increased availability of affordable housing, making homeownership more accessible.
- Greater incentives for private developers to invest in social and economic infrastructure.
For potential homebuyers and property investors, this means there will be more affordable housing options, and the development of integrated living spaces will continue to rise.” (Source)
Budget 2025: key takeaways for IGrow property investors
The 2025 Budget allocations have produced a mixed bag of pros and cons for South African property investors, but there’s a lot to be optimistic about!
The most valuable news for IGrow property investors concerns no transfer fees for a wider range of properties, public-private partnerships for new developments, reduced fuel costs for the construction industry, as well as the proposed infrastructure investments. This creates potential investment opportunities for large-scale property developers. IGrow property investors can invest in new buy-to-let properties that qualify for Section 13 Sex Tax Act deductions! (View our recent blog post: Section 13 Tax Incentives for IGrow Property Investors for property portfolio holders of 5 + rental properties).
The fact that there will be no fuel levy increase is excellent for construction cost implications and property management expenses. Household income will balance out the “pinch” created by the new VAT increases and bolster the government’s decision not to impose inflationary adjustments to income tax brackets.
The huge R1 trillion infrastructure investment announced by the local government offers exciting long-term benefits. Improved roads, water supply, and energy upgrades will enhance property values in well-serviced municipal areas.
Final Thoughts
The South African budget speech for 2025 highlights why you need to be strategic in your property investments and get expert advice from IGrow, who have proven strategies for choosing the right investment properties and managing your taxes.
There are some challenges but also many wonderful opportunities.
The major investments in essential infrastructure and the anticipated government reforms will provide long-term growth potential in the property market, and the reduction in transfer duties offer fantastic savings for investors and signal a positive attitude towards the property sector by the Government.
With these changes and the lower interest rates in 2025, this is your year to turn investment dreams into reality!
Book a consultation with an IGrow property investment strategist and we will help you adapt your property investment strategies. We’ll assist you in capitalising on property market opportunities laid out by the 2025 South African National Budget Speech. IGrow’s team will help you keep up with the ever-transforming real estate market.
