Retirement reality in South Africa: These small changes can boost your savings

The 2023/2024 Retirement Reality report by 10X Investments reveals a worrying statistic: only 6% of South Africans have enough savings to retire comfortably.

For many, this means that working longer, along with strategic financial planning, could be essential for improving retirement prospects.

One additional year of work can make a significant difference. For example, if you earn R80,000 a month and save 15% for retirement, that’s an extra R144,000 in savings for the year.

But the benefit goes beyond savings—it means one less year of relying on those funds.

Working longer not only allows more time for savings to grow, but it also shortens the retirement period, reducing the overall drawdown from savings.

Investments also play a crucial role. A R5 million retirement portfolio, growing at 6% above inflation, could add R300,000 in a year without any extra contributions.

This growth can help offset expenses during retirement, covering months of costs with no additional effort from the saver.

Cutting back on living expenses before retirement can also have a big impact. For instance, reducing monthly spending by R5,000 could decrease the total amount needed for retirement by R1.2 million, assuming a 5% drawdown rate.

Not only does this allow more money to remain invested, but it also reduces the amount of tax paid on retirement withdrawals, helping to preserve more capital.

Investment fees, often overlooked, can have a significant effect on retirement savings. A 1% fee on R6 million in retirement savings may not seem substantial, but if fees rise to 2%, it could require reducing the drawdown rate or working longer to accumulate enough funds.

Fees can erode returns over time, delaying retirement or forcing adjustments to withdrawal plans.

Many South Africans are finding creative ways to supplement their retirement income, such as renting out property or taking on consulting work.

These additional income sources reduce the reliance on retirement savings and offer greater financial flexibility.

Lifestyle changes, such as downsizing a home or cutting transportation costs, can also help retirees reduce their expenses. Retirees often find they can live more economically by adjusting their habits, such as cooking at home or reducing unnecessary travel.

Ultimately, retirement readiness is about balancing savings, managing expenses, and considering options for supplementary income.

By working longer, reducing spending, and making informed investment choices, individuals can significantly improve their financial position and retire with greater confidence, said 10X.

Top 15 most expensive suburbs to buy property in South Africa

The South African property market is becoming more appealing, with the repo rate declining, improving conditions for buyers.

In 2024, Llandudno in Cape Town recorded the highest average property price of R26.5 million, with a peak sale of R45 million, according to Lightstone Property’s annual report.

Despite this, the market remains under pressure, as high interest rates and a slow economy have caused a decline in transaction volumes.

However, Cape Town continues to lead in high-end real estate, with suburbs like Camps Bay, Clifton, and Constantia attracting strong demand for homes priced over R20 million.

Notably, Seeff Property Group sold 20 properties over R20 million in 2024, including multiple sales over R50 million in areas such as Clifton and Camps Bay.

Even the City Bowl, including Higgovale, Oranjezicht, and Tamboerskloof, saw significant sales, with one home in Oranjezicht fetching R43 million.

Cape Town’s top 10 suburbs now boast average house prices over R10 million, with four areas—Clifton (R43m), Llandudno (R27m), Camps Bay (R21m), and Higgovale (R20m)—surpassing R20 million.

The luxury market has also seen remarkable activity in Constantia Upper and Bishopscourt, where properties have sold for as much as R39 million.

Over the past five years, Cape Town’s property prices have surged by 30%, far outpacing Johannesburg’s 8.6% growth.

The city’s robust infrastructure, proximity to top schools and the University of Cape Town, and strong capital growth continue to drive demand in prime locations.

Foreign buyers are also increasingly drawn to South Africa, with many seeking vacation homes, retirement properties, or investment opportunities.

Recent notable purchases include a R72 million holiday home in Constantia by Austrian buyers and a British retiree relocating for year-round golf.

The country’s Retired Person’s Visa, offering easy access and low income thresholds, is a major incentive for retirees from Europe, the UK, the US, and Canada, according to Xpatweb.

The Western Cape and KwaZulu-Natal remain popular destinations, with areas like the Atlantic Seaboard, Franschhoek, Stellenbosch, and Umhlanga seeing high demand.

South Africa’s properties offer significant value for money, with homes typically 20-30% larger than in Europe. Foreign buyers accounted for 10% of sales in Cape Town in 2024, further bolstering the market.

Below is a list of the top 15 most expensive suburbs by average property price in 2024:

SuburbAverage Price Paid (R)Number of SalesMaximum Price Paid (R)
Llandudno26.5 million1545 million
Bishopscourt23 million2050 million
Clifton20.1 million2750 million
Constantia Heights18.4 million2548 million
Constantia18.2 million1034 million
Alphen17.7 million1740 million
Bel Ombre16.4 million3645.5 million
Steenberg Golf Estate15.3 million2030 million
Waterfront14.2 million5243.8 million
Higgovale13.8 million3032.5 million
Witteboomen13.6 million1121.5 million
Bakoven13.3 million7545 million
Silverhurst12.9 million3439 million
De Zalze Golf Estate12.6 million1927 million
The Links12.5 million1220.5 million
Bantry Bay12 million7250 million

Ramaphosa puts economy and job creation top of agenda

Growing the economy and job creation are at the top of the seventh administration’s agenda, president Cyril Ramaphosa said on Thursday.

“We want a nation with a thriving economy that benefits all. To create this virtuous cycle of investment, growth and jobs, we must lift economic growth to above three percent,” the president said, as he delivered the State of the Nation Address (SONA) in Cape Town.

In the first SONA of the seventh administration, the president said government has adopted the Medium-Term Development Plan, which sets out a clear and ambitious programme for the next five years.

The actions contained in the plan advance three strategic priorities: driving inclusive growth and job creation; reducing poverty and tackling the high cost of living as well as building a capable, ethical and developmental state.

“To achieve higher levels of economic growth, we are undertaking massive investment in new infrastructure while upgrading and maintaining the infrastructure we have.

“We are engaging local and international financial institutions and investors to unlock R100 billion in infrastructure financing. A project preparation bid window has been launched to fast-track investment readiness.

“This includes revised regulations for public private partnerships, which will unlock private sector expertise and funds,” the president explained.

This, he said, could lift economic growth to 3% while tackling the country’s high unemployment rate.

Focus on infrastructure

Over the next three years, government will spend more than R940 billion on infrastructure. This includes R375 billion in spending by state owned companies.

“This funding will revitalise our roads and bridges, build dams and waterways, modernise our ports and airports and power our economy. Through the Infrastructure Fund, 12 blended finance projects worth nearly R38 billion have been approved in the last year.”

The aim of the Infrastructure Fund is to use committed government funding to leverage much higher levels of private sector investment in public infrastructure. Managed by Infrastructure South Africa, the fund is a portfolio of blended finance projects and programmes. 

“These are projects in water and sanitation, student accommodation, transport, health and energy. Construction of the Mtentu Bridge continues. This bridge will rise above the river between Port Edward and Lusikisiki, and will become the tallest bridge in Africa,” the president said.

The Polihlali Dam will feed 490 million cubic metres of water a year from the Lesotho Highlands into the Vaal River System, securing water supply to several provinces for years to come.

In addition, government is working with international partners to revitalises small harbours and unlock economic opportunities for coastal communities.

“We are steadily removing the obstacles to meaningful and faster growth,” he said.

Operation Vulindlela

As government continues to implement economic reforms through Operation Vulindlela, the president said a new sense of optimism and confidence in the economy has been created.

“We have made progress in rebuilding and restructuring a number of our network industries. We are seeing positive results in the improvement of the functioning of our network industries as well as the investment opportunities that are opening up and are being taken by investors leading to job creation. 

“Working together with business, labour and other social partners we must now finish this work. Over the coming year, we will initiate a second wave of reform to unleash more rapid and inclusive growth,” the president said.

Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery.

The initiative aims to modernise and transform network industries, including electricity, water, transport and digital communications.

“Our immediate focus is to enable Eskom, Transnet and other state-owned enterprises that are vital to our economy to function optimally. 

“We are repositioning these entities to provide world-class infrastructure while enabling competition in operations, whether in electricity generation, freight rail or port terminals.

“We continue with the fundamental reform of our state-owned enterprises to ensure that they can effectively fulfil their social and economic mandates.”

This includes the work underway to put in place a new model to strengthen governance and oversight of public entities. 

“We will ensure public ownership of strategic infrastructure for public benefit while finding innovative ways to attract private investment to improve services and ensure public revenue can be focused on the provision of public services,” the president said.

Meanwhile, government is in the process of establishing a dedicated State-Owned Enterprise (SOE) Reform Unit to coordinate this work. 

Energy Action Plan

“The measures we have implemented through the Energy Action Plan have reduced the severity and frequency of load shedding, with more than 300 days without load shedding since March 2024.

“While the return of load shedding for two days last week was a reminder that our energy supply is still constrained, we remain on a positive trajectory. 

“We now need to put the risk of load shedding behind us once and for all by completing the reform of our energy system to ensure long-term energy security.”

The resident said the Electricity Regulation Amendment Act, which came into effect on 1 January, marks the beginning of a new era.

The act sets out far-reaching reforms of the country’s electricity sector, including the establishment of a competitive electricity market.

“This year, we will put in place the building blocks of a competitive electricity market. Over time, this will allow multiple electricity generation entities to emerge and compete.

“We will mobilise private sector investment in our transmission network to connect more renewable energy to the grid,” Ramaphosa said.

Institutional investors failing to capitalize on this one property sector

The South African Multifamily Residential Rental Association (SAMRRA) has published a new research report highlighting the sector’s rapid growth, robust demand, and strong investment potential.

Compiled by the Centre for Affordable Housing Finance (CAHF), the report underscores the multifamily residential market’s resilience and stability, with 23% of South African households renting their homes.

SAMRRA‘s growing membership includes key players managing over 75,000 units valued at R72 billion, reflecting the expanding scale of this sector.

“Our research confirms that the multifamily residential rental sector in South Africa is characterised by its resilience, stability, and potential for long-term growth,” said SAMRRA CEO Myles Kritzinger.

The CAHF report reveals that around 4.5 million (23%) South African households are renters, with 685,000 of these in apartments. Over the past five years, the rental market has grown by 9%, driven by urbanisation and demographic shifts. This has opened doors for institutional-grade rental portfolios.

“The growth trajectory is not only indicative of the sector’s vitality but also highlights the strategic advantage for investors,” said Kritzinger.

The sector’s potential is further boosted by strong environmental, social, and governance (ESG) metrics. “Interestingly, the offering has shifted from basic accommodation to ‘convenience living,’ with added amenities,” said Kecia Rust, Executive Director of CAHF.

Despite its promise, the multifamily sector has remained largely overlooked by institutional investors due to a lack of data. SAMRRA’s efforts to improve transparency and provide market insights are changing this, instilling investor confidence. According to MSCI, the multifamily sector outperformed other real estate classes in 2022 and offered stable, cash-backed returns, making it an attractive proposition in a volatile market.

Recent performance data from SAMRRA members shows high occupancy rates (96.5% to 98.5%) and strong lease collections, reinforcing the sector’s appeal. With record leasing months and over 500 leases signed each month, demand for quality rental accommodation is evident.

The multifamily residential sector is becoming a key driver of economic growth in South Africa, contributing to job creation and urban regeneration. “The future of multifamily rentals in South Africa is bright, with significant opportunities for scale and institutional investment,” said Kritzinger.

Globally, multifamily rentals are recognised as a mature asset class, accounting for a significant portion of investment property by value.

In South Africa, the sector is poised to follow this trajectory, driven by high occupancy rates, urbanisation and changing lifestyle preferences fuelled by increasing rental demand, the multifamily sector offers a compelling case for long-term institutional investment.

8 things investors need to know about South Africa’s property market right now

Seasoned investors in South Africa are presented with a diverse array of investment opportunities in the real estate market in 2025.

With economic shifts, evolving demographics, and emerging trends, understanding the landscape is essential for making informed investment decisions, notes Harcourts property group.

The South African economy has shown signs of recovery post-pandemic, which is expected to positively impact the real estate market. It is expected there will be slow and steady reductions in the repo rate throughout 2025, leading to an increased buyer pool from both first-time buyers and investors.

“This economic recovery will enhance affordability for first-time buyers, making homeownership more accessible,” said Richard Gray, CEO of Harcourts South Africa.

Here’s a comprehensive guide to what seasoned investors need to know this year.

  1. Economic Landscape and Market Recovery
    South Africa’s economy is on a path to recovery following the disruptions caused by the pandemic. The recent reports from the South African Reserve Bank indicate a gradual improvement in economic indicators, which is expected to positively influence the real estate market. Gray said: “A recovering economy often leads to increased property demand, creating a ripe environment for seasoned investors.”
  2. Interest Rates and Financing Strategies
    Interest rates are projected to stabilise in 2025, with potential reductions that could enhance borrowing conditions. Investors should consider leveraging these favourable rates to finance new acquisitions or refinance existing properties. Lower interest rates can lead to increased cash flow and higher returns on investment, making it an ideal time to expand portfolios.
  3. Emerging Property Hotspots
    Investors should keep a close eye on emerging property hotspots across South Africa. Areas experiencing infrastructural development, such as new transport links and commercial hubs, often present lucrative opportunities.

“For example, regions in the Eastern Cape and KwaZulu-Natal are seeing growth due to increased investments in infrastructure, making them attractive for property investment,” said Gray.

  1. The Shift Towards Rental Properties
    With the ongoing economic recovery, there is an increasing demand for rental properties. Investors may find it beneficial to focus on the buy-to-let market, particularly in urban areas where demand for rental accommodation remains high. According to Lightstone, the rental market is expected to remain strong, driven by a growing population and shifting lifestyle preferences.
  2. Sustainable Real Estate Investments
    Sustainability is becoming a significant factor in property investment decisions. Investors are increasingly seeking properties that incorporate eco-friendly features and energy-efficient designs. A focus on sustainable real estate not only meets market demand but can also lead to long-term cost savings.

Gray emphasises this trend, stating: “Investors who prioritise sustainability will reap the rewards as buyers and tenants alike are leaning towards greener options.”

  1. The Role of Technology in Real Estate Investment
    Technology is transforming the way real estate transactions are conducted. Seasoned investors should embrace these innovations to streamline their investment processes. Staying ahead in tech adoption can create competitive advantages in the market.
  2. Regulatory Changes and Compliance
    It is essential for seasoned investors to stay informed about regulatory changes impacting the real estate market. Changes in property laws, zoning regulations, and taxation can significantly affect investment strategies. Consulting legal experts and staying updated through industry news will ensure compliance and risk mitigation.
  3. Diversification Strategies
    Diversifying investment portfolios can help mitigate risks associated with market fluctuations. Seasoned investors should consider branching out into different property types, such as commercial, residential, and industrial real estate. This approach not only spreads risk but also taps into various revenue streams.

Cape Town tops household spending in South Africa

South African households collectively spent an estimated R3 trillion between November 2022 and November 2023, with the average annual household consumption expenditure amounting to approximately R143 691 during the survey year.

These findings are according to the Income & Expenditure Survey (IES) 2022/2023, published by Statistics South Africa (Stats SA).

South African households allocated the majority of their consumption expenditure to four main areas in 2023: housing and utilities, food and non-alcoholic beverages, transport, and insurance and financial services.

These categories accounted for 75.6% of total household spending, meaning that three out of every four rand were directed toward these essentials.

While the average annual household consumption expenditure in 2023 was R143 691, the median household consumption expenditure was significantly lower at R82 861.

The disparity between the average (mean) and median annual household consumption expenditure in South Africa reflects significant income inequality within the country.

A large portion of the population spends well below the national average, pulling the median household consumption expenditure down.

In 2023, the average household income was reported at R204 359.

Regionally, Gauteng dominated consumption expenditure, contributing 36% of the total household consumption expenditure, followed by the Western Cape at 18.4%.

While Gauteng’s share was unsurprising due to its population size, Western Cape households emerged as the wealthiest in terms of household consumption expenditure, with an average annual household expenditure of R229 636 and a median consumption expenditure of R128 536.

By contrast, Gauteng households spent an average of R170 628 annually, with a median of R96 933.

In metropolitan areas, Cape Town households led with the highest average household consumption expenditure of R248 539 and a median of R140 523. The City of Tshwane followed, with an average of R198 035 and a median of R123 176.

Over the last eight years, average household consumption expenditure decreased by 7.2% in real terms.

Discovery Green to supply renewable energy to leading property groups

Discovery Green has signed five new clients in the mining, property and hospitality sectors, securing long-term partnerships with Impala Platinum Holdings, KP Lime, The Capital Hotels and Apartments, Balwin Properties, and Fortress REIT Limited.

Wheeling is the delivery of energy from a generator to an end-user located in another area through the use of an existing distribution or transmission networks.

Discovery Green, part of the Discovery Group, provides affordable and price-certain renewable energy to businesses in South Africa, advancing the country’s transition to cleaner, more sustainable energy solutions.

The agreement with Implats represents a key achievement for Discovery Green’s portfolio. Beginning in 2026, a five-year Power Purchase Agreement (PPA) will provide 90% of the electricity required for Impala Refineries in Springs, Gauteng.

This agreement is expected to reduce Impala Refineries’ Scope 2 greenhouse gas emissions by more than 852,000 tonnes of CO2e over the next five years, while delivering substantial cost savings on over 130,000 MWh of electricity annually.

Patrick Morutlwa, Group COO at Implats, said: “From 2026, the PPA will reduce our Scope 2 GHG emissions by 170,484 tonnes CO2e per year and advance our goal of achieving a 30% reduction in carbon emissions by 2030, off 2019 as our baseline year.”

Discovery Green also signed a deal with KP Lime, a producer and distributor of burnt lime and dolomite. The 10-year power purchase agreement (PPA) will supply 54,000 MWh of renewable energy annually to the Bowden mine in the Northern Cape.

This agreement will replace over 90% of the mine’s energy needs with renewable energy, delivering significant cost savings and contributing to the mine’s sustainability goals.

The group said it is also finalised long-term agreements with The Capital Hotels and Apartments, Balwin Properties, and Fortress REIT Limited last quarter.

A 15-year agreement with The Capital Hotels and Apartments will supply 5,000 MWh of renewable energy annually to three of The Capital’s properties in Gauteng.

In a 20-year contract signed with Balwin Properties, Discovery Green will supply renewable energy to four Balwin sites, totalling 13,600 MWh annually.

The agreements follow a 10-year wheeling arrangement with Fortress REIT Limited, a leading property group. Discovery Green will wheel renewable energy to 14 Fortress properties, increasing Fortress’s renewable energy penetration up to 100% in these buildings.

By partnering with Discovery Green, the companies are positioned to replace more than 90% of their electricity demand with renewable energy wheeled from the largest wind and solar plants in South Africa, saving a total of 39,000 tonnes of CO2e emissions annually. The transition to renewable energy allows the companies to avoid escalating electricity costs, which are rising faster than inflation, and mitigate the impending impact of carbon taxes.

“These partnerships highlight our commitment to supporting sustainable business growth and resilience, helping companies remain competitive in an increasingly dynamic market,” said Andre Nepgen, head of Discovery Green.

No one in South Africa will ‘have their land confiscated’

South Africa’s much talked-about Expropriation Act is something that should be looked at in the context of its painful past wherein land was a commodity not afforded to the majority.

Last week, president Cyril Ramaphosa signed into law the Expropriation Bill, which sets out how organs of State may expropriate land in the public interest for varied reasons. 

In a statement, The Presidency said the new legislation, which repeals the pre-democratic Expropriation Act of 1975, aligns expropriation processes with the Constitution.

Section 25 of the Constitution recognises expropriation as an essential mechanism for the state to acquire someone’s property for a public purpose or in the public interest, subject to just and equitable compensation being paid.

Honorary professor of International Relations at the University of the Witwatersrand, professor John Stremlau, gave his thoughts on the signing into law of the act which is the culmination of a five-year process of public consultation and Parliamentary deliberation.

“It is constitutional, reflecting a long-standing asymmetry between white ownership in the majority of the land and black ownership for the majority of the people being confined to marginal lands and so there is that position that is reflected in the document. But it’s not precipitous in any way and calls for due process,” he told SAnews.

The Act allows for the State to expropriate land in the public interest – subject to just and equitable compensation.

This as the recently signed act, drew the ire of the United States of America president, Donald Trump. 

Reports this week emerged that the US President has moved to halt future funding to South Africa as his administration investigates allegations of “land confiscation” – following president Ramaphosa’s assent of the Expropriation Act.

US funding to South Africa is related to PEPFAR (US President’s Emergency Plan for AIDS Relief) Aid and constitutes some 17% of the country’s HIV/AIDS programme.

The professor further stressed that South Africa “has a right of eminent domain…overriding private property.”

This as minister Lamola earlier told SAnews that expropriation laws are not unique to South Africa. 

“We trust president Trump’s advisors will make use of the investigative period to attain a thorough understanding of South Africa’s policies within the framework of a constitutional democracy. This approach will promote a well-informed viewpoint that values and recognises our nation’s dedication to democratic ideals and governance,” the minister said.

The New York Times The Learning Network defines eminent domain as the right of the state to take private property for public use adding that the Fifth Amendment that was added to the Constitution of the United States requires that just compensation be made.

“And South Africa is struggling to overcome the apportioning of land to the settlers and not to the natives. I didn’t think that the parts that I read were in any way unreasonable and reflected the painstaking negotiations…with the communities to reassure those who have properties that they will be full compensated, but, and that at the same time they may be subject to pressures from the government but also government land. It strikes me as a very reasonable approach and I don’t mind being quoted on that,” said the professor.

Stremlau added that “there are Americans like me who are offended by Trump’s arbitrariness.” 

The expert’s comment come on the heels of a Presidency statement stating that the Act is “not a confiscation instrument, but a constitutionally mandated legal process that ensures public access to land in an equitable and just manner as guided by the Constitution”. 

The Act states that property may not be expropriated arbitrarily or for a purpose other than a public purpose or in the public interest.

SA-US relations

Asked about whether the act will likely sour relations between South Africa and the US, Stremlau said: “America is a complicated place, and there are Americans like me who are offended by Trump’s arbitrariness.”

“It is very much about where the body politic will land as is the case here. And president Ramaphosa should be congratulated for a Government of National Unity.”

On whether the alarm bells raised by the US could see South Africa kicked out of the African Growth and Opportunity Act (AGOA), he said he was hopeful that cool heads will prevail.

AGOA is a unilateral trade preference scheme that provides qualifying sub-Saharan African countries with duty-free, quota-free access into the United States market.

“Congress has by a partisan majority supported the AGOA but South Africa is a standout nation because it is a middle income country and AGOA is intended for poor African countries. South Africa has been a critical member of AGOA and I would hope that cool heads would prevail,” he said.

Since its enactment in 2000, AGOA has been at the core of US economic policy and commercial engagement with Africa. The act is an initiative of the United States and is aimed at giving duty-free market access for producers in eligible countries in sub-Saharan Africa.

He further added that “colleagues” at the Department of International Relations and Cooperation have “a really tough job ahead.”

“I wouldn’t be second guessing them; I think the country should get behind them. But the average South African voter cares about pocketbook issues and getting a job, that has got to be president Cyril Ramaphosa’s total preoccupation,” he said.

Earlier, Public Works and Infrastructure minister Dean Macpherson reiterated government’s stance on the Act, stressing that no one in South Africa will “have their land confiscated”.

“The Expropriation Act sets out a clear legal framework under which expropriation may take place, always with due process and court oversight,” Macpherson said, adding that the Government of National Unity will always put the interests of South Africa first.

Professor Stremlau’s comments come ahead of the seventh administration’s first State of the Nation Address (SONA) which President Ramaphosa will deliver before a joint sitting of the National Assembly and the National Council of Provinces on Thursday, 6 February.

In mapping out South Africa Inc’s path for the year ahead, president Ramaphosa will reflect on the year that was and is likely to include legislation that has been passed, including the Expropriation Act.

“Americans respect what South Africa is trying to do in the aftermath of the terrible Apartheid era,” said Stremlau.

Ramaphosa’s State of the Nation Address is probably not the speech you are looking for

Economic growth, service delivery, infrastructural development, and job creation are some of the key issues that president Cyril Ramaphosa is expected to address in his highly anticipated State of the Nation Address (SONA) scheduled for Thursday, 6 February 2025.

Professor Dirk Kotze from the University of South Africa’s (Unisa) Department of Political Sciences, noted that economic growth will take centre stage in the president’s speech.

“I think first of all, what President Ramaphosa will focus on is, as always, on the economic matters – economic growth; the economic plan that he has developed since 2018,” Kotze said.

“Yes, electricity is definitely becoming more of a success story, but he will continue with that,” he added.

According to the political analyst, other important areas, including health, education, defence, and Home Affairs, will also be addressed.

Kotze explained that SONA focuses on the current year and outlines the government’s plans and the legislative agenda for Parliament. This includes the introduction of new legislation, as well as a medium-term plan covering the next three years.

“He will also refer to some matters that will later be presented in more detail in the budget speech by the minister of finance [Enoch Godongwana]. So, these two, the budget speech and the SONA address, are very much linked to each other.

“I don’t think one can expect new issues,” he added.

Godongwana is set to deliver the annual budget speech on 19 February.

In addition, the professor stated that the president’s address will reaffirm the government’s position on issues, such as climate change.

“Renewable energy will receive, I think, a lot of attention, given the developments in the US, president [Donald] Trump, who wants to move away from that,” he said.

Tomorrow’s SONA will mark the president’s first SONA as the head of the Government of National Unity (GNU) in the seventh administration.

Deputy minister in the Presidency, Kenny Morolong, said that Ramaphosa will address the nation following an election that led to the formation of a GNU, as no single political party received enough support to govern independently.

“This SONA will outline the three priorities and strategic direction of the GNU which are to drive inclusive growth and job creation, to reduce poverty and tackle the high cost of living, and to build a capable, ethical and developmental state.”

Investec chief economist Annabel Bishop said that the SONA tends to touch on the same themes each year, comparing progress against the prior year.

Investors will focus on the various crisis gripping the country such as weak growth, freight constraints, poor governance at a number of state entities, particularly municipalities and the need to fight crime and corruption, the economist said.

“The water and sanitation crisis, still high unemployment (poverty and weak growth) and GBV will also be in focus, while SA has seen greatly improved electricity supply stability which will be noted in particular.”

“A quicker turnaround on the water crises and at Transnet, particularly better enabling PPPs is a key theme investors are focused on, along with a sharp reduction in red tape, reduction in the regulatory burden.”

Bishop said that SONA’s typical blandness supports unchanged medium-term Budget direction, but greater fiscal consolidation is needed to return SA to investment grade and inspire business and investor confidence.

Bishop said that the Budget on 19th February is expected to see similar fiscal ratio projections to 2024’s Medium Term Budget Policy Statement (MTBPS), where gross loan debt was revised up, both for the current fiscal year, and over the projection period, with the same case for the budget deficit.

Turning to inflation targeting, in the MTBPS, National Treasury stated more work needs to be done in this regard, and some update is expected in the Budget later this month.

“While National Treasury sets the inflation target, and the Reserve Bank is tasked with achieving the target, the Reserve Bank has stated it believes there is a need to lower the inflation target.

“National Treasury has worried about negative effects that could ensue on the economy and households, while the SARB has already published research on the positive implications from lowering the target.

“Overall, for the Budget, state finances are not strong, and this weakness, combined with better-than-expected inflation but lower than expected GDP outcomes, means further fiscal slippage remains a risk,” said Bishop.

In an opinion piece for Daily Maverick, Dr. Ross Harvey, Director of Research and Programmes at Good Governance Africa (GGA) and senior research associate at the Institute for the Future of Knowledge at the University of Johannesburg, argues that for South Africa to achieve sustained economic growth, the GNU must address systemic governance failures, ensure political accountability, and overhaul economic and security policies.

Harvey stressed that beyond traditional economic indicators, policy must prioritise labour absorption and a more dynamic private sector. This requires a fundamental shift in approach, focusing on skills development, market-aligned industrial policy, and simplified regulatory frameworks.

“Governance remains South Africa’s Achilles’ heel. The country’s political institutions must be rejuvenated to enable economic dynamism. While the GNU represents a shift in political power, it has yet to prove its ability to deliver meaningful change.

“Coalition politics needs built-in commitment devices to avoid instability and consequent policy paralysis, from the national level right down to local municipalities,” Harvey said.

At the local level, ineffective municipal governance continues to hamper service delivery. Harvey suggests that a national municipal performance dashboard, tracking spending, service delivery, and infrastructure projects in real time, could enhance accountability and transparency. Without stronger municipal performance, South Africa’s growth will continue to be stifled by local inefficiencies, which deter investment and hinder progress.

Earlier this week, the World Bank raised its growth forecast for South Africa, citing a sustained recovery in the energy and logistics sectors. However, it warned that the nation will still struggle to achieve the level of growth needed to significantly reduce poverty and unemployment.

In its latest South Africa Economic Update report, the Washington-based lender increased its GDP growth projection for 2025 to 1.8%, up from a previous estimate of 1.3%. The bank also predicts growth will pick up to 2% by 2027.

The modest recovery is expected to be driven by improvements in infrastructure and a relatively favourable external environment. The bank noted that inflation is expected to remain stable, supporting further monetary easing, which could boost credit to businesses and households, supporting economic growth.

Since September, South Africa’s central bank has reduced its key interest rate by 75 basis points to 7.5%, as inflation stays below the 4.5% target midpoint. However, the World Bank cautioned that even with this growth, it would not be sufficient to tackle the country’s high poverty and unemployment rates.

It noted that each 1% increase in GDP is expected to generate only 30,000 to 50,000 jobs due to the low employment elasticity to GDP growth in South Africa.

Consequently, it projects poverty and unemployment rates will remain elevated, with poverty above 60% and unemployment over 30% for the foreseeable future.

With interest payments consuming a significant portion of government revenue, South Africa will need to reduce its fiscal deficit from 6% to 4.6% of GDP by 2027 to ensure public debt remains sustainable.

However, the country faces numerous risks, such as global trade tensions, political instability, high crime, and persistent social unrest.

Additionally, the government’s fiscal consolidation efforts could be hindered by labour unions seeking higher wages and the financial needs of state-owned companies like Transnet and various regional governments.

Standard Bank building loan data reveals rising trend in Cape Town property market

Data from Standard Bank shows that one in eight mortgage applications nationally over the past year were for buy-to-let properties, highlighting the growing interest in property investment across South Africa.

The Western Cape stands out as a key hotspot, with 31% of new home loan applications in the province linked to buy-to-let ventures—more than double the national average of 12%.

“Over the past decade, the Western Cape has consistently positioned itself as an investment destination. Areas like Cape Town have benefitted from steady demand driven by tourism and a growing expat community,” said Chiko Manokore, head of Personal and Private Banking at Standard Bank.

The surge in interest in bed and breakfasts (B&Bs) and stand-alone homes within estates has been particularly notable over the last five years. The Western Cape also ranks second—after Gauteng—in terms of building loans issued by Standard Bank, with a significant portion of these loans taken up by buy-to-let investors.

“You are seeing more uptake for large estates, lots of bed and breakfasts, and interestingly, a growing number of people building multiple properties on a single stand,” added Manokore.

In Gauteng, South Africa’s economic hub, buy-to-let activity is nearly double the national average, with Tshwane leading in property investment. The province’s rental market is largely driven by investors seeking additional income streams.

“In Johannesburg, property investment tends to focus more on rental income, unlike the Western Cape, where short-term rentals are particularly popular,” said Manokore.

The Eastern Cape is also gaining traction in the buy-to-let market, with property investment exceeding the national average. In contrast, KwaZulu-Natal (KZN) has seen a dip in buy-to-let activity, with only 6% of home loan applications in the province linked to property investment.

“KwaZulu-Natal unfortunately has lost some speed, especially in the last few years, due to challenges like environmental setbacks, floods, and the 2021 riots, which have impacted investor confidence,” the property lead said.

Despite economic challenges and high inflation, South Africa’s rental market showed remarkable resilience throughout 2024.

Some analysts are speculating that recent interest rate cuts could prompt more tenants to transition into homeownership.

Grant Smee, CEO of Only Realty Property Group, noted that rental growth outpaced inflation for the first time in nearly five years, rising by 5.2% year-on-year in June 2024.

The Western Cape, South Africa’s most expensive province, led the charge with a rental growth rate of 9.7%, narrowly edged out by the North West province.

Gauteng and KwaZulu-Natal, however, experienced some of the lowest growth rates.

According to StatsSA’s Household Survey, the percentage of households opting to rent increased from 17.7% in 2020 to 23.9% in 2022. This shift was further reinforced by a slowdown in rental escalations to 4.29% in Q2 2024, as reported by TPN.

Smee attributes this trend to the flexibility and affordability rental properties offer, especially in areas like gated estates, where purchase costs can be prohibitive.

While interest rate cuts could make homeownership more accessible, Smee pointed out that high living costs and reduced savings may still deter potential buyers.

He also notes that financial stability and savings are critical for securing home loans, with many lenders requiring a deposit.

However, Smee does see a positive impact for buy-to-let investors, particularly in the Western Cape, where demand remains high.

Lower interest rates may encourage investors to secure properties that offer rental income and help cover expenses.

He also acknowledged the potential drawbacks for tenants, as they may not see immediate benefits from rate cuts, unlike property owners.

Nonetheless, he believes the interest rate adjustments will have more positive than negative effects overall, even if some areas, like Gauteng, experience higher vacancy rates.