Budget reforms set to lift property markets in Johannesburg and Cape Town
South Africa’s 2025 Medium-Term Budget Policy Statement (MTBPS) has been released, with strong implications for the country’s two largest real estate markets. Industry voices in both Johannesburg and Cape Town have welcomed the combination of fiscal discipline, lower inflation targets, and renewed infrastructure investment.
Finance Minister Enoch Godongwana’s announcement that national debt will stabilise at 77.9% of GDP, the first time this has occurred since 2008, signals a turning point for confidence, long-term investment, and macroeconomic predictability. The reforms, together with the government’s R1 trillion infrastructure commitment over the next three years, are expected to strengthen property fundamentals across major metros.
Johannesburg: a market primed for stability and renewed confidence
Johannesburg stands to benefit significantly from the reforms, particularly given the city’s ongoing efforts to address service delivery failures and infrastructure bottlenecks.
Stephen Whitcombe, MD of FIRZT Realty, believes the Budget marks a critical moment for the metro’s property landscape, “The city has been working hard to overcome the effect of service delivery failures and infrastructure bottlenecks in the run-up to the G20 Leaders’ Summit later this month, and now stands to benefit even more from the government’s dual focus on private-sector partnerships in infrastructure and the restoration of municipal capability”.
A central feature of the MTBPS is the new inflation target of 3% (down from the previous range of 3–6%). Whitcombe notes that this shift offers meaningful long-term benefits for Johannesburg households and developers. “A more disciplined macro-economic framework, highlighted by the widely expected confirmation that SA’s inflation target will immediately be reduced to 3%, sets the stage for lower and more stable interest rates over time. This is particularly significant for Johannesburg, which is the epicentre of SA’s economy but where housing affordability is still a concern for millions of potential buyers”.
The Budget’s commitment to stabilising the national debt and growing the revenue surplus by nearly R20 billion is also expected to ease the risk premium placed on South African assets.
“For Johannesburg, this translates into much improved long-term funding prospects for both public and private infrastructure – and the city’s crucial growth corridor, industrial node and urban regeneration projects,” shares Whitcombe. “Developers and corporate tenants are likely to experience and appreciate a much more predictable investment environment as fiscal credibility strengthens.”
Municipal reform, a major theme of the MTBPS, is another area where Johannesburg stands to gain.
“The Treasury’s pilot utility reform programme, aimed at professionalising water and electricity management through partnerships with accredited agencies, should soon have tangible impacts in the city’s northern and eastern regions, where service reliability has undoubtedly affected property values in recent years,” he says.
At the same time, the reallocation of R19.3 billion toward trading services reform in metros, tighter credit control and cost-reflective tariffs are expected to reduce longstanding billing disputes and improve the financial health of city utilities.
Commercial and industrial prospects are also improving as national logistics reforms progress. “As Transnet’s freight and port efficiency continues to improve, property demand in logistics hubs such as City Deep, Midrand and the East Rand is likely to strengthen, with ripple effects on employment and residential demand in those areas,” says Whitcombe.
Looking ahead, he emphasises the opportunities linked to forthcoming infrastructure mechanisms, “With a new infrastructure bond and a dedicated implementation agency to be operational by 2026, Johannesburg could soon be attracting fresh waves of investment into mixed-use precincts, affordable housing and urban renewal projects, particularly in areas aligning with the city’s smart and green growth agenda.”
In his view, “In the medium term, a better-aligned inflation framework, restored fiscal credibility and targeted improvements in municipal capability are vital steps towards a more sustainable and inclusive real estate future for the city that is key to SA achieving greater economic growth and job creation.”
Cape Town: a convergence of strong fundamentals
While Johannesburg welcomes the reforms for their stabilising effect, Cape Town’s property market is positioned to advance on an already solid foundation.
According to Ryan Greeff, Quay 1 International Realty CEO, the city is entering a new phase of economic and property market resilience. The firm notes that the MTBPS “delivers significant positive signals for Cape Town’s property market and represents a genuine inflection point for the sector.”
Quay 1 points to the stabilisation of national debt at 77.9% of GDP as a significant moment for investor sentiment. “This commitment to fiscal stability provides a strong foundation for sustainable growth in property values and investment activity,” says Greeff.
The new inflation target is another meaningful development. “One of the most impactful announcements is the new inflation target of 3%, with a one percentage point tolerance band, replacing the previous 3 to 6% range. This policy shift is particularly significant, as lower inflation expectations translate directly into reduced borrowing costs.”
Greeff highlights that lower borrowing costs will support affordability in both mid-market and affordable segments, while strengthening Cape Town’s position as a magnet for foreign investment. “This makes homeownership more accessible across mid-market and affordable housing segments, while supporting continued foreign investment in Cape Town’s luxury coastal and vinelands properties.”
Infrastructure commitments also play directly into Cape Town’s strengths.
“The government’s R1 trillion infrastructure commitment over three years, including transport, logistics, and water security improvements critical to the Western Cape, directly addresses constraints that have historically limited Cape Town’s growth potential.”
Improved port efficiency and prioritised water infrastructure are expected to boost investor confidence in the region further.
Greeff concludes: “With debt stabilising and interest rates declining, the city is moving toward an environment not seen since before the pandemic. At Quay 1 International Realty, we view this MTBPS as validation of our strategic focus on Cape Town’s long-term fundamentals. The combination of infrastructure investments, lower borrowing costs, and stable inflation creates an environment where property can once again serve as a reliable store of value and a vehicle for growth.”
A national turning point, regional opportunities
Taken together, insights from Johannesburg and Cape Town suggest that the property sector is entering a more predictable and opportunity-rich phase. Johannesburg stands to benefit from improved municipal capabilities, logistics revival, and targeted infrastructure renewal, while Cape Town is bolstered by fiscal stability, significant infrastructure commitments, and consistently strong provincial governance.
If the government delivers on the reforms outlined in the MTBPS, both metros are well-positioned to convert macro-level stability into real market momentum, supporting renewed investor confidence, unlocking pent-up demand from buyers, and laying the groundwork for sustainable long-term growth across South Africa’s urban property markets.
Property Professional