SA’s residential property market is showing signs of renewed momentum, with house prices rising steadily in recent months as interest rate cuts ease pressure on consumers.
While prices rose towards the end of last year, the rate at which they have increased in 2025 has accelerated, with the FNB house price index rising 1.5% in January, 1.7% in February, 2% in March, 2.4% in April and 2.6% in May, as lower borrowing costs improved demand and activity.
Continued rate relief is expected to support buying activity, particularly in the low- to mid-market segments, while accelerated economic reforms will be essential to improving sentiment and activity in the higher-priced segments, FNB’s property barometer reads.
While FNB’s research points to a stabilising housing market, it did warn recent gains were largely driven by a sharper contraction in supply rather than a meaningful rise in demand.
“The recent hesitation in demand growth may reflect heightened global and domestic policy uncertainty — much of which has since eased. On the supply side, the contraction is largely due to a sustained decline in new housing stock, which is aligned with weak sentiment and anaemic economic conditions,” said FNB senior economist Siphamandla Mkhwanazi.
New housing completions were down 14% year to date after sharp annual falls of 7.4% in 2024 and 25.9% in 2023, highlighting ongoing pressure on supply, according to the barometer.
“Nonetheless, we expect growth to gradually pick up to about 2% by 2027, supported by easing inflation and anticipated interest rate cuts, which should boost consumer spending,” Mkhwanazi said.
Meanwhile, the Pam Golding residential property index paints a more bullish picture. CEO Andrew Golding noted that house price inflation surged in 2025, buoyed by the recent repo rate cuts and improved sentiment among residential buyers and investors.
“Residential property remains a mainstream asset class, offering capital appreciation potential over the medium to long term, alongside favourable rental income prospects,” said Golding.
According to property data firm Rode, nominal house prices in SA are beginning to recover after years of sluggish growth — though the rebound remains modest. Contributing to this mild uptick are lower inflation, slightly higher salaries and recent interest rate cuts. The introduction of the two-pot retirement system had also enhanced the purchasing power of some households.
Still, with GDP growth forecast at just 1%-1.5% in 2025, Rode advised caution, warning a sustained surge in house price inflation was unlikely.
“We expect a further 25 basis point repo rate cut by September, bringing it to 7%, which should support affordability and boost property market sentiment. However, the Reserve Bank may move sooner than expected to lower its inflation target to 3% — a shift FNB had originally anticipated for 2026,” Mkhwanazi said.
He said if inflation and inflation expectations remained elevated into 2026, the Bank might stay cautious, which could pressure short-term housing affordability but support long-term stability.
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