After a month’s delay, the Finance Minister presented his 2025 Budget on Wednesday, 12 March 2025. Although the proposed Budget has not been approved by Parliament, it is important to note that in its current form, it contains some good and bad news for prospective homebuyers.
Here is a snapshot of the good and the bad news:-
On the positive side
- A renewed undertaking to invest in infrastructure focusing on energy, municipal services, water supply and sanitation, roads and other transport facilities, plus affordable and effective broadband connectivity that will promote economic growth, and foster employment opportunities. This will also promote a real increase in property value if implemented effectively.
- No adjustments to capital gains tax, dividends tax, donations tax or estate duties.
- No increase in fuel levies.
- The threshold has been increased by 10% from R1.1 million to R1.21 million, which means that no transfer duty will be levied on properties purchased which are valued below R1.21 million and those above the threshold will only attract transfer duty on every rand above the threshold.
On the negative side
The personal income tax brackets were not fully adjusted for inflation. This will impact middle- and higher-income earners who will pay more in real terms. This effectively reduces their disposable income, which may result in less money for savings, home loan repayments, and property investments.
The VAT increase of 0.5% this year, and a further 0.5% increase in 2026/27 with the increase in zero-rated foods to cater for the poor.
The VAT increase will amongst others:-
- Increase all municipal tariffs levied by the local authorities on property.
- Add to the already increasing electricity tariff, as electricity supply is not zero-rated.
- Increase the cost of services associated with the purchase of a home, for example, bond registration and transfer fees, bond cancellation costs, cost of moving, and estate agent commission.
- Increase building costs and the price of homes in new developments as these prices normally include VAT.
- Increase monthly rental, where the landlord is VAT registered.
- It could create a shift in market dynamics that benefits certain segments as it may drive up costs for developers, purchasers, sellers and renters in the short term, which may result in the reduction of demand for new developments. In turn, this might stimulate increased activity in the secondary property market, particularly in the affordable housing segment, leading to an increase in the value of these properties.
- The rental market may also experience growth, as affordability becomes more of a concern for average consumers who will opt to rent while navigating the changing economic environment.
