Samuel Seeff, chairman of the Seeff Property Group, says the Medium-Term Budget Policy Statement (MTBPS) presented by Finance Minister Enoch Godongwana should be seen as a stable and fair fiscal plan under challenging macroeconomic conditions.
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Despite notable headwinds, both the broader economy and property market have shown resilience, he says. The economic outlook clearly reflects a delicate balancing act, focusing on stabilising national debt while simultaneously addressing critical growth bottlenecks such as infrastructure delays and mounting spending pressures.
While the economic growth has been revised downward to around 1.2% from the initial 1.6%, Seeff says this seems realistic given international pressures from Middle East conflicts and global trade policies.
A stronger focus on fiscal management is welcomed including the news that national debt is falling as a percentage of GDP (gross domestic product), and the primary surplus is growing while debt servicing costs are coming down.
The proposed fiscal guardrails and legislation designed to hold the government to strict spending and debt boundaries is also welcomed. This includes the expanded oversight role for the Financial and Fiscal Commission, including the ability to veto non-compliant financial plans.
Support for proposed municipal finance reforms
On local government expenditure, Seeff voiced strong support for proposed municipal finance reforms aimed at compelling municipalities to adopt realistic budgets and improve revenue collection, especially through conditional transfers. National commitment to substantial infrastructure investment is also encouraging as it supports long-term property values and urban development.
On consumer affairs, Seeff acknowledged the positive impact of the upward revision of tax revenues by R17.1 billion (due largely to higher commodity prices in the mining sector). The temporary fuel levy cuts for November and December will provide some relief for households facing financial strain from recent interest rate increases and broader inflation pressures. The extension of the Social Relief of Distress (SRD) grant into next year is also welcomed for consumers.
Need to hold off on further interest rate hikes
Seeff also welcomed the news that there seems to be no immediate plans for increased taxation apart from inflationary adjustments to personal tax brackets planned over the following three years, from 2027.
Higher taxes, living costs and the higher interest rate are a direct impediment to economic growth and the property market. Seeff therefore again reiterated the need to hold off on further interest rate hikes and to focus on bringing the interest rate down as soon as possible.
Without adequate disposable income, consumer spending will contract, negatively impacting economic expansion, business confidence, and job creation. Ultimately, he says, constrained household income and employment growth severely restrict the ability of first-time buyers to step onto the property ladder, compounding the challenges posed by the country’s ongoing housing shortage.
