South Africa’s residential property market has shown remarkable resilience this year, continuing to perform steadily despite a series of negative global and local economic pressures, including rising oil prices linked to conflict in the Middle East, renewed inflation concerns and the recent increase in interest rates.
Recent data from the FNB Property Barometer and BetterBond’s Property Brief suggest that while conditions have become more challenging, the market remains fundamentally sound. House prices are still rising faster than inflation, buyer activity remains above pre-pandemic levels and home loan applications continue to show healthy demand.
One of the key reasons for this resilience is that the market entered 2026 from a position of relative strength. Following the post-pandemic recovery initially driven by first-time buyers and later supported by repeat buyers, demand has increasingly broadened to include higher-income households benefiting from stronger wealth positions, says FNB. At the same time, constrained housing supply has continued to support prices, with residential building activity still well below the levels seen before the Global Financial Crisis 20 years ago. In simple terms, there are still not enough well-priced homes available to fully meet buyer demand in many areas.
Affordability has also improved, even in the face of higher borrowing costs, due to a decline in real house prices during the 2010s, the introduction of more flexible funding solutions, rising wages in selected sectors and improved household finances and debt levels.
Another important confidence booster has been the improving perception of SA’s economic outlook. Recent positive responses from the world’s three major ratings agencies, Moody's, S&P Global Ratings and Fitch Ratings, have reinforced the impression that structural reforms are beginning to gain traction and that growth prospects are gradually improving. This is helping to boost investor confidence while also contributing to Rand strength. A stronger rand, in turn, is helping to limit imported inflation pressures, particularly from higher oil prices.
There are other encouraging indicators too. The Reserve Bank’s leading business cycle indicator strengthened again in March, suggesting continued economic momentum, while stronger job advertising activity and improved vehicle sales also point to gradually improving consumer confidence.
Meanwhile, rental inflation has accelerated, especially in the apartment sector, which may encourage more tenants to consider buying as the cost gap between renting and owning narrows.
This is not to say there are no negatives. The recent increase in the prime lending rate to 10,5% is likely to slow momentum somewhat and extend buyer-sensitive conditions in many market segments. Higher deposit requirements and elevated living costs may also limit affordability for some households, while continued geopolitical tensions could place renewed pressure on inflation and financial markets.
Even so, most indicators suggest that the residential property market should remain resilient through the remainder of 2026 – and could swiftly gain momentum if a lasting peace agreement is reached in the Middle East and oil prices decline accordingly.
As for home prices, expectations remain positive. The BetterBond report shows that during April and May, the average home price paid by first-time buyers rose 9% year-on-year, while that paid by all buyers grew by 8,6%, easily outpacing inflation at 4%. The average price paid by first-time buyers in May was R1,4m and that [paid by all buyers just above R1,7m.
