July 28 2026 15:30
Homeowners and aspiring buyers across South Africa were lucky last week when the South African Reserve Bank (SARB) announced that it would leave interest rates unchanged, despite inflation climbing to 5% in June.
Berry Everitt, CEO of the Chas Everitt International property group said many households expected an increase in borrowing costs after recent spikes in fuel prices, electricity tariffs and municipal charges pushed inflation well above the Reserve Bank’s preferred 3% target. “Instead, the Monetary Policy Committee opted to leave rates where they are, recognising that consumers are already under considerable financial pressure. And for anyone with a home loan, this decision means monthly bond installments, as well as other debt repayments, will remain unchanged for now, which is good news at a time when household budgets are already being stretched by higher transport costs and escalating utility bills,” he said.
The ongoing war in Iran has made global economies suffer more with ucertainty.
From a property market perspective, he said, the decision will also help to maintain the positive momentum that has been building over the past year. “Buyer confidence has been steadily improving, demand for well-priced homes has strengthened and South Africa’s banks continue to compete vigorously for quality home loan business. However, the rise in inflation is likely to have one important effect. While the residential market has been gradually shifting from a buyers’ market towards a sellers’ market, that transition is now expected to happen more slowly than many estate agents had anticipated only a few months ago,” he said.
One of the biggest mistakes home sellers can make is pricing their property according to what they hope to achieve rather than what buyers are currently prepared to pay.
“As has been shown again and again, an inflated asking price may initially appear attractive, but it often results in fewer viewings, longer marketing periods and eventually price reductions that leave buyers wondering why the property has remained unsold. By contrast, homes that are accurately priced from the outset continue to attract strong interest and, in many cases, multiple offers. And in today’s market, professional pricing advice from an experienced local estate agent with access to current sales evidence, buyer activity and local market trends has never been more valuable,” said Everitt.
Meanwhile, he says, maintaining the status quo on interest rates could also create excellent opportunities for those homeowners who are planning to upgrade. “By selling now while demand is healthy, owners can take advantage of current market activity and then purchase their next home before property values begin rising more rapidly. In other words, while they may not yet achieve the premium prices that characterise a full sellers’ market, they will most likely also pay less for the property they are buying than they would if they delayed their move until the market has shifted further in sellers’ favour,” he said.
But if global oil prices begin easing over the coming year as some economists expect them to, and inflation starts moving back towards the Reserve Bank’s target, the prospect of future interest rate reductions will add momentum to the housing market and accelerate the transition to a full sellers’ market, with stronger price growth and faster sales becoming increasingly common.
Pam Golding’s CEO Dr Andrew Golding agreed that leaving the repo rate unchanged provided welcome relief for consumers with debt, including mortgage holders, and for prospective home buyers. While households continue contend with elevated fuel prices and rising electricity and municipal tariffs, the decision offers greater certainty for consumers and businesses at a time of heightened global economic uncertainty.
MPC members faced a particularly difficult decision following the release of the June Consumer Price Index (CPI), which rose to a higher than anticipated 5%, up from 4.5% in May, he said. Of particular concern is that, with oil prices rising above US$90 a barrel and the rand under pressure, the inflation outlook has become more challenging, particularly as tensions in the Middle East continue to escalate.
Prior to the release of the June CPI data, analysts had largely anticipated that the MPC would pause the hiking cycle. Although core inflation increased to 4.1% in June, edging above the South African Reserve Bank’s (SARB) 3% target and beyond its 2-4% tolerance range, policymakers ultimately elected to keep rates unchanged while continuing to monitor inflation risks and developments in the global environment.
The increase in core inflation, which excludes fuel, electricity and food prices, suggests that underlying inflationary pressures are becoming more persistent and are broadening beyond these volatile components. Together with the deteriorating inflation outlook, this raises concerns about the potential emergence of second-round effects, where higher input costs begin to feed through more broadly into prices across the economy.
Strongest house price growth since 2021
Despite ongoing global and domestic headwinds, South Africa’s residential property market is resilient and is displaying healthy capital appreciation, with national house price inflation (HPI) accelerating to 5.1% in June and averaging 4.8% during the first half of 2026. This represents the strongest national house price growth since the post-pandemic rebound in 2021, when HPI averaged 5.5%.
According to the Pam Golding Residential Property Index, the Western Cape continues to outperform by an increasing margin, averaging 10.3% during the first half of 2026, well ahead of Gauteng (3.0%) and KwaZulu-Natal (2.8%).
SOURCE: Pam Golding Residential Property Index
Interestingly, coastal house price inflation has stabilised at approximately 5% during the first half of 2026, while growth in non-coastal house prices has continued to accelerate, reaching 5.4% in June and outperforming coastal HPI for the fourth consecutive month.
The gap between freehold and sectional title house price inflation also continues to narrow, with freehold price growth increasing to 6.3% in June, while sectional title HPI accelerated to 4.9%.
Among the major metropolitan markets, Cape Town once again led the country in the first half of 2026, with average house price inflation of 11.1%, followed by Ekurhuleni at 5.0%.
SOURCE: Lightstone
In other news, first-time buyer applications rebounded to 48.8% in June 2026 and averaging 48% during the first half of 2026, according to ooba Home Loans, up 1.6 percentage points from a year earlier. Growth in first-time buyer demand during H1 2026 was concentrated in more affordable regions, with the Free State (+8.1 percentage points) and Gauteng South and East (+3.3 percentage points) recording the strongest gains compared with the same period last year.
According to ooba, average concessions relative to prime improved in seven of the nine regions during H1 2026 compared with year-earlier levels, while the national approval rate averaged 83.9%, up 0.83 percentage points year on year. Applications for 100% home loans averaged 56.9% during the first half of the year, an increase of 1.9 percentage points from year-earlier levels, reflecting banks’ willingness to lower barriers for cash-constrained households.
Approval rates for pre-qualified applicants remained particularly strong at 91.2%, while approval rates for non-pre-qualified buyers averaged 80.3%.
alistair@propertyflash.co.za
