In the short term, the property sector will continue to see considerable public sector infrastructural support through the expanded public works programme, expenditure on social grants and transport infrastructure.  

The announced personal tax concessions in the Budget are expected to primarily benefit lower income households and therefore indirectly the lower income residential property market. The retail segment of the commercial property sector that relies on the lower income group expenditure should similarly see some benefits.    

The expected economic growth expectation of 2.3 per cent in 2010, rising to 3.6 per cent by 2012, should result in increased take-up of space in the commercial property sector as the sector moves out of the troughs of the property cycle.

The budget focussed on the need to develop an industrial policy that removes obstacles to economic growth and employment.  In devising such a policy, policy makers will need to pay attention to the functioning and flexibility of land markets. This will require the formulation of land policies, including the provision of electricity and other infrastructure that often hinders development activity.

While the property sector is often seen as an outcome of economic growth and development, its role as a catalyst for employment and economic growth is often not sufficiently appreciated.     

The budget identified the difficulties that middle income groups have in accessing funds to acquire a home. While enhancing such access is of critical importance, it is equally important that South Africa should avoid the formulation of policies that have played a role in creating the sub-prime problem experienced in certain industrialised countries. In devising a future industrial policy it is of equal importance that policies be devised that can improve the functioning of the low income strata of the residential property market.

The budget announced that SARS has prioritised the replacement of manual processes relating to the payment of transfer duties with electronic processes, including the phasing out of cash payments by tax payers.  The VAT treatment  of commercial  and residential accommodation  is being  reviewed to overcome the problem  that while  the supply of commercial accommodation (e.g. student  furnished apartments) is  taxable at the rate of 14% per cent , the supply of residential accommodation is exempt.

The focus in the 2010 Budget provides a clear indication of government’s acceptance that the room for fiscal stimulatory policy has narrowed and that the future trajectory of the economy will increasingly rely on the development of an industrial policy that unleashes the country’s development potential.  This will also mean improving the productivity and flexibility of land markets and other markets that directly and indirectly impact the built environment.