As interest rates remain unchanged, it is anticipated that it will bring short-term stability to South Africa’s property market, despite buyers and industry professionals hoping for a cut to improve affordability and boost activity.
As interest rates remain unchanged, it is anticipated that it will bring short-term stability to South Africa’s property market (Image source: © 123rf
123rf)
As interest rates remain unchanged, it is anticipated that it will bring short-term stability to South Africa’s property market, despite buyers and industry professionals hoping for a cut to improve affordability and boost activity.
With inflation edging slightly higher to 3.6% in December 2025 from 3.5% in November, and despite the fuel price relief expected in February 2026 following a significant fuel price reduction in January, the Monetary Policy Committee adopted a cautious stance by keeping the repo rate unchanged at 6.75%.
While the decision was not what existing mortgage holders and prospective homebuyers seeking credit were hoping for, most market commentators believe that, with inflation remaining contained, there is scope for up to two 25bps repo rate cuts during 2026.
The outlook for interest rates is supported by ongoing rand resilience, easing inflation expectations, and softer global oil price,s says Dr Andrew Golding, chief executive of the Pam Golding Property group.
“Positively, the demand for housing remains steady, with stock shortages in high-demand areas and signs of recovery evident across markets and regions, including Gauteng.
“Furthermore, according to ooba Home Loans, demand for investment and buy-to-rent properties is already surging.
“Recent interest rate reductions, together with growing optimism around the scope for further cuts this year and improved prospects for stronger economic growth, have supported a clear rebound in investor demand.”
Dr Golding says that all factors considered, the year ahead is therefore expected to offer sound prospects for both buyers and sellers.
“As interest rates gradually ease and filter through the housing market, affordability should improve, while competitive lending conditions are likely to sustain buyer appetite.
“At the same time, rising GDP and improved revenue collections underpin a stable and encouraging macroeconomic environment.”
Luxury market
He also expects the luxury market to continue experiencing steady demand. Activity across major metros is likely to be concentrated in more affordable price bands and value-driven suburbs, as lower interest rates support increased participation by first-time buyers.
“Cape Town is set to remain the strongest metro overall, but sustained price growth and limited stock available for sale are likely to redirect interest toward surrounding small towns, particularly coastal and lifestyle destinations.”
Welcome certainty
The South African Reserve Bank’s decision to hold the repo rate steady provides welcome certainty for homeowners and prospective buyers, says Toni Anderson, Head of Home Services at Standard Bank.
“This reinforces a period of stability in the residential property market.”
While interest rates remain unchanged, the cumulative effect of earlier rate cuts has already begun to improve affordability and buyer sentiment.
Since the easing cycle started towards the end of 2024, Standard Bank has observed increased engagement from prospective homeowners, with steady home loan application activity reflecting renewed confidence in the market.
A stable rate environment allows buyers to plan with greater certainty and supports more balanced decision-making. For sellers, this stability encourages realistic pricing, which remains a key driver of successful transactions in the current market.
Holding rates at current levels allows households time to adjust to earlier relief, while providing a supportive backdrop for sustained recovery in housing demand across select regions.
For prospective buyers who have been waiting on the sidelines, a period of rate stability may present an opportunity to enter the market with greater confidence, particularly while competition remains measured and affordability has improved relative to recent years.
Strategic sweet spot
Adriaan Grové, CEO of MyProperty agrees that the unchanged repro rate is a welcome signal of stability for the South African property market.
“While many were hoping for a further cut following the relief we saw in November, this steady hand approach by the Monetary Policy Committee (MPC) provides homeowners with much-needed predictability for their monthly budgets.
For those looking to enter the market, this period of stability represents a strategic sweet spot, he adds.
“With the prime lending rate holding steady at 10.25%, the cost of borrowing remains significantly more attractive than the highs of previous years, making homeownership more of a possibility for a broader segment of the population.”
Gerard Abrahamse 20 Jan 2026 A win for first time buyers
Fritz Swanepoel, CEO of Leapfrog Property Group says the SARB's decision to hold the repo rate today is a win for first-time buyers looking for a clear and confident entry point into the property market.
“After the rate relief we’ve seen since late 2024, the prime lending rate, now sitting at 10.25%, has materially lowered the affordability hurdle.
For entry-level buyers in particular, this period of stability brings predictability to monthly bond repayments and improves confidence when planning a purchase.
This stable phase creates an opportunity to secure property at current valuations while benefiting from a more supportive lending environment.
His guidance to buyers is simple: get prequalified. “The gap between renting and owning has narrowed to the point where ownership is no longer aspirational - it's a smart, sustainable financial decision for the year ahead.”
Ongoing financial strain
However, Adrian Goslett, CEO and Regional Director of Remax Southern Africa, says that while the outcome may be welcomed from a certainty perspective, it will still be disappointing for homeowners and potential buyers who are under ongoing financial strain.
“Although holding rates steady does offer some predictability for the market, the reality is that many South Africans are still feeling the pressure of a higher cost of living and strained household budgets.”
