Despite the tax relief announced in the 2026 Budget, a severe shortage of lower-priced housing persists, with more than seven South African households competing for every formal property in the lowest price band.
Lightstone’s Managing Executive of Real Estate, Hayley Ivins-Downes, said the 2026 Budget Speech delivered welcome news for South African consumers and could stimulate demand for affordable housing.
She specifically pointed to the decision to withdraw the provisionally proposed R21.3 billion in tax increases as providing relief to the taxpayer.
This adjustment comes after revenue collection beat expectations, which was driven mainly by a commodities boom.
The adjustment of personal income tax brackets and rebates, fully in line with inflation, will also help protect household disposable income from bracket creep.
This phenomenon occurs when tax tables and deduction limits are not adjusted for inflation, resulting in taxpayers paying more.
South Africa’s personal income tax brackets were last adjusted for inflation in the 2023/24 fiscal year, with the Treasury having relied on bracket creep to cushion its revenue ever since.
“From a property market perspective, putting money back into the pockets of potential buyers was a vital demand-side stimulus,” Ivins-Downes said.
“However, increased household affordability must be met with available housing stock. For the affordable housing sector, the structural supply deficit was a significant hurdle.”
Lightstone data revealed the scale of the shortage at the lower end of the market, where the ratio of households to properties was highest at 7.2 for properties valued at under R160,000.
If an assumed backlog of 1 million properties in registration were added, the ratio would drop to 3.6.
Properties within the R160,000 to R330,000 band reflected a household-to-property ratio of 4.5. In higher-priced property bands, the ratios were lower.
The ratio is close to 1 property per qualifying household for properties valued at R330,000 or more, except for the above R2 million properties, where there are theoretically 1.85 households per property.
Fiscal relief granted, but trouble remains
Ivins-Downs cautioned that there were complicating factors in making household-to-property stock assumptions. This includes informal settlements, traditional housing, and homes on trust land that are not registered at the Deeds Office.
Single owners holding multiple properties, buyers purchasing lower-value properties they can afford, and backlogs in the government’s registration of subsidised properties also complicate assumptions about the supply.
Ivins-Downes explained that while the fiscal relief announced in the Budget is a positive step, it is only one half of the equation.
“Our data confirms that even when affordability improves, the lack of formal stock priced under R500,000 acts as a hard barrier to entry. We are not just facing a credit challenge; we are facing a supply-side crisis.”
Finance Minister Enoch Godongwana reiterated the government’s commitment to spatial and housing reforms to restructure cities and ensure people have access to affordable housing close to economic centres.
However, Ivins-Downes stressed the importance of translating these housing policy goals into development.
“Accelerating the release of publicly owned land and unblocking municipal infrastructure delays would be essential to matching renewed buyer demand with adequate supply.”
While challenges remain, the 2026 fiscal framework does provide a positive foundation for consumer confidence.
“If the demand-side financial relief can be paired with the promised R1 trillion infrastructure investment, the property sector could unlock new avenues for wealth creation,” said Ivins-Downes.
“The desire for homeownership remained strong, and easing supply constraints would allow households to turn a monthly expense into a permanent asset.”
