Budget 2026: Fix the municipalities, and you fix the property market
By Richard Gray, CEO of Harcourts South Africa
The 2026 Budget Speech may not have delivered dramatic headline-grabbing tax cuts for property, but it has done something arguably far more important. It has placed municipal capability and performance at the centre of South Africa’s economic recovery. For the real estate sector, that focus could be transformative.
For years, we have seen how service delivery shapes property values. Electricity reliability, water security, sanitation, refuse removal and billing integrity are not “nice to have” extras. They are foundational to whether families stay in an area, whether businesses invest and whether banks feel confident lending against property in a particular metro.
The allocation of R27.7 billion over the medium term for performance-linked reform of metro trading services such as electricity, water, sanitation and solid waste is a decisive step in the right direction. Linking funding to performance signals that delivery, not just allocation, matters. That is a powerful message. Importantly, this sits within a broader infrastructure commitment of more than R1 trillion over the medium term, reinforcing that the rebuilding of municipal capability is part of a much larger national investment drive.
We have seen a clear pattern over the past decade. Many South Africans have chosen to “semigrate” to better run municipalities where service delivery is more consistent and governance stronger. Property markets in those areas have significantly outperformed metros struggling with infrastructure failures and administrative challenges.
When services falter, property values stagnate. When services improve, confidence returns.
If these reforms are implemented effectively, we could see a revival in areas where the property market has lagged behind other metros. Reliable electricity, predictable water supply and properly managed infrastructure do more than make daily life easier. They reduce business risk, attract investment and restore homeowner confidence. That has a direct impact on demand, pricing and long-term growth.
This Budget recognises that municipal performance is not a side issue. It is central to economic growth and to the health of the real estate market.
On the tax front, there are also meaningful positives for property owners and investors.
The primary-residence Capital Gains Tax exclusion rises to R3 million, up from R2 million. The annual CGT exclusion increases to R50,000. These are significant wins for homeowners, particularly in stronger metro and coastal markets where property values have appreciated over time.
This adjustment reduces the tax burden on families selling their primary homes and improves mobility in the housing market. When people are less penalised for realising gains, they are more willing to upgrade, downscale or relocate. That stimulates transaction activity and supports market momentum.
Transfer duty thresholds and brackets remain unchanged, which provides stability and predictability. In a year where many feared broader tax shocks, maintaining these levels is itself reassuring.
Beyond property-specific measures, this Budget is structured to leave more money in consumers’ pockets. Tax brackets have been adjusted for inflation, CGT thresholds have been lifted, and medical tax credits have been adjusted. When households retain more disposable income, they are more likely to save, invest and plan for the future. Property consistently benefits when confidence and affordability improve.
Real estate does not operate in isolation. It responds to fiscal stability, municipal competence and consumer confidence. This Budget avoids heavy-handed tax increases and instead focuses on structural reform, particularly at municipal level. That is encouraging.
If performance-linked reforms translate into visible improvements on the ground, we could see a narrowing of the gap between high-performing and underperforming metros. That would not only reduce the need for semigration but potentially unlock growth in areas that have long underperformed.
At Harcourts, we always say property is about people first. Families want safe, functional communities. Investors want predictable returns. Businesses want reliable infrastructure. This Budget acknowledges that without capable municipalities, none of that is sustainable.
The opportunity now lies in execution. If reform becomes reality, South Africa’s property market could enter a far more balanced and confident phase, driven not only by tax relief but by something even more powerful: functioning cities and towns that people are proud to call home.
