SA property sector upbeat as interest rate cuts lift market sentiment

South Africa’s major property groups remain cautiously optimistic about growth prospects in the year ahead, citing interest rate cuts in 2025, subdued inflation and improving economic fundamentals as key drivers of renewed activity in the housing market.

Dr Andrew Golding, chief executive of Pam Golding Property Group, said a series of interest rate reductions, together with easing price pressures and significant fuel price cuts through 2025 and early 2026, had meaningfully improved household finances and bolstered activity across the national housing market.

“Notably, there was a discernible strengthening in national sales activity both in terms of volume and, more particularly, value during the second half of last year," he said.

While acknowledging the uncertainty inherent in forecasting, Golding said the outlook for 2026 appeared constructive. He expects the pace of domestic economic activity to strengthen further this year, with the possibility of additional interest rate relief in the first half of 2026.

“Furthermore, if the international oil price remains subdued and the rand remains resilient, local price pressures should subside further, providing an additional boost to local household finances and, in turn, the housing market.”

Golding added that South Africa’s removal from the Financial Action Task Force (FATF) grey list in October 2025 has provided a meaningful boost to investor confidence, particularly among foreign buyers. The delisting is expected to simplify property transactions, reduce compliance costs and stimulate renewed interest in high-end residential property.

"Overall, while the market is stabilising and showing numerous pockets of vibrancy, a sustained recovery will depend on broader economic improvements, policy certainty, and continued financial sector support," Golding said.

"The local elections this year could go some way towards boosting consumer confidence, particularly in Gauteng, which has seen its housing market come under pressure due to the ongoing failure of service delivery.”

Golding noted that similar dynamics apply to most regions outside the Western Cape.

“2026, therefore, looks like it will continue to offer very good prospects in the property market, as interest rates continue to ease and banks remain competitive in regard to lending – thereby increasing consumer appetite for residential property acquisitions.”

Samuel Seeff, chairman of the Seeff Property Group, also struck an upbeat tone, saying the group expects a positive year for both sales and rentals.

He attributed the improving outlook to stronger economic fundamentals, a firmer rand, historically low inflation and a supportive lending environment characterised by faster bank approvals.

“The sales market is set for further recovery off the back of the much-improved economic fundamentals, the stronger rand, record-low inflation, and a supportive lending environment characterised by faster bank approvals, and importantly, the potential for at least two additional interest rate cuts,” Seeff said.

He added that inflation remains at historic lows and is trending within the South African Reserve Bank’s proposed lower target range of 2% to 4%, providing further scope for monetary easing.

Seeff said interest rates remain one of the most powerful drivers of demand in the housing market, with the benefits of last year’s rate cuts already filtering through. Lower borrowing costs have improved affordability and freed up disposable income for prospective buyers.

“This has freed up more disposable income to enable buyers to invest in their own homes. On a home loan of R1 million, the rate cuts since mid-2024 have, for example, resulted in a monthly saving of R1 000. It also means that a buyer could now buy at a slightly higher price," he said.

Given the strength of the rand and the benign inflation outlook, Seeff expects at least two further rate cuts in the first half of the year, potentially starting as early as late January.

Increased activity and competition, he said, are likely to support further price growth, although regional differences will persist.

“More activity and competition in the market will also drive up prices, although we are likely to continue seeing a “tale of two markets,” with the Cape continuing its higher price appreciation compared to Gauteng at the other end of the scale,” he said.

He said that Gauteng’s position could change rapidly if improvements are made to basic services and infrastructure.

“That may not always be the case, especially if a new government comes in and we see a dramatic improvement in basic services and infrastructure maintenance and development.”

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