South Africa’s latest 25-basis-point rate increase is expected to test affordability and slow activity in housing, although property groups say demand remains resilient in parts of the market.
South Africa’s residential property market is likely to face renewed pressure after the South African Reserve Bank’s (SARB) Monetary Policy Committee raised the policy rate by 25 basis points to 7.25%.
The increase, announced on Wednesday, will raise borrowing costs for many homeowners and prospective buyers.
Adrian Goslett, CEO and regional director of RE/MAX of Southern Africa, said affordability had become an even greater priority for buyers.
“With house prices in the Western Cape sitting at nearly double those of other provinces in South Africa, many buyers appear to be broadening their search to more affordable regions where they can find better value for money,” he said.
Goslett said this had contributed to renewed interest in markets such as Gauteng, where comparatively lower prices continued to support demand.
He said the rate increase was understandable given continued uncertainty in the global economy.
“The Reserve Bank had a tough decision as it weighed local inflationary pressures against an uncertain international economic environment,” Goslett said.
He added that inflation remained above the SARB’s 3% target, although the relevant inflation figure and month should be specified before publication.
The comments followed the release of RE/MAX’s National Housing Report for the first quarter of 2026, which described the market as resilient but increasingly shaped by affordability concerns and changing buyer preferences.
Samuel Seeff, chairman of the Seeff Property Group, said the SARB should have looked beyond short-term price pressures and focused on long-term economic stability.
“The current inflationary spike is driven by temporary factors such as oil prices rather than runaway domestic demand. It will place an unnecessary squeeze on the property market, which is a key driver of economic growth and wealth creation,” he said.
Seeff said the market had remained resilient, but higher interest rates had contributed to limited growth over the past three years.
He added that national transaction volumes were about 16% below pre-pandemic levels.
“Higher interest rates are temporary, and lending conditions remain fundamentally favourable,” Seeff said. “Well-positioned buyers who act now can still secure good value.”
Property market remains uneven
Dr Andrew Golding, chief executive of the Pam Golding Property group, said residential demand continued to be supported by demographic, lifestyle and economic factors, although market performance varied between regions and price bands.
FNB’s latest Property Barometer reported that the average time properties spent on the market had declined to 10 weeks and one day in the third quarter of 2026 — the fastest selling pace recorded since 2022.]
Golding said the rate increase came as the residential market was showing signs of adapting to changing economic conditions.
“While higher borrowing costs will require buyers to reassess affordability and may temper activity, continued first-time buyer demand, competitive lending conditions, improving selling times and consistent demand at the top end point to a market that remains resilient,” he said.
Jonathan Kohler, founder and chief executive of Landsdowne Properties, said the increase would force prospective buyers to examine their monthly budgets more closely, particularly those also repaying car loans or other debt.
“Some will look at less expensive homes, while others will remain in their rentals for longer,” he said. “Buyers will still be out there, but they will be more careful about the price they offer and the cost of living in the home.”
Kohler said this was likely to slow the market. Sellers could wait longer for offers, while asking prices that were already difficult for buyers to afford could become harder to achieve.
He expected the initial effect to be fewer sales and longer selling times rather than an immediate fall in property prices.
“For renters hoping to buy, staying put for another year has a cost of its own: another year of rent while trying to save a deposit,” Kohler said.
He added that buyers should choose homes they could still afford if borrowing costs rose again.
yogashen.pillay@nationalmg.co.za