Many South Africans may find themselves on the edge of their seats as speculation grows that another hike could be on the cards.
This is as the country prepares for the next interest rate announcement by the South African Reserve Bank later this month.
A decision of an interest-rate again will not come as a surprise following the South African Reserve Bank’s (SARB) decision in May, says Adrian Goslett, CEO and regional director of REMAX Southern Africa.
“Many homeowners and prospective buyers will be hoping for some relief when the Monetary Policy Committee meets later this month, but the SARB has to look beyond the immediate impact on consumers and focus on keeping inflation under control and ensuring long-term economic stability.”
In May, the Monetary Policy Committee (MPC) decided to increase the policy rate by 25 basis points, to 7%, effective from May 29.
“Given the level of global uncertainty and the inflationary risks that remain, it would not be surprising to see the Reserve Bank continue taking a cautious approach.
“Adding to this, any breakdown in ceasefire agreements introduces another layer of international instability and contributes to a more conservative financial decision by the SARB,” he explains.
This sentiment is said to be echoed by Hannah Marais in Deloitte’s South Africa Economic Outlook (June 2026).
“Recent SARB statements continue to highlight that the underlying drivers of recovery remain intact, citing favourable trading terms, macroeconomic resilience, and progress in ongoing domestic reforms. While South Africa’s near-term outlook has deteriorated, its medium-term trajectory has not fundamentally changed.”
Additional pressure on household budgets
The CEO notes that while another interest rate increase would place additional pressure on household budgets, it should be viewed in the context of the Reserve Bank’s broader objective of maintaining long-term economic stability.
With inflation currently at 4.5%, the SARB may consider further increases to keep inflation under control.
“Higher borrowing costs are never welcome, especially for homeowners and prospective buyers wanting to enter the market, but it’s important to remember that keeping inflation under control creates a more predictable environment. Although the months ahead may remain challenging, 2026’s outlook continues to point towards one of resilience,” Goslett says.
Market hesitation and delayed purchasing: the historic response to interest rate hikes
Last week, Gerhard Kotze, the CEO and franchisor at RealNet Properties SA, said middle-class homebuyers are changing their strategies.
He said that historically, when interest rates rose in South Africa, the more traditional middle-class response was market hesitation and delayed purchasing.
However, he says that they now seem to be acting a little out of character.
“Instead of hiding out on the sidelines waiting for a dramatic rate-cutting cycle, buyers are quietly stepping back onto the floor. The numbers prove it.
“If we revisit the latest BetterBond Property Brief, it can be noted that home loan applications have surged by 12.5% since the low point of the rate-hiking cycle. Buyers have digested the macro-environment, adjusted their expectations, and are transacting anyway.”
A complete shift in household buying power
According to RealNet Properties SA, what is driving this resilience is a complete shift in household buying power. It says the average monthly income of homebuyers has climbed to a substantial R68,800, pacing forward at an average annual rate of 10% in real terms since the pandemic.
It adds that the middle-class homebuyers are entering the market as higher-earning, highly stable contenders.
“As a result, they are targeting higher-value properties. Average home prices are growing at 8.6% year-on-year, handily outpacing inflation.
“Even more telling is where the financing momentum is moving: over the last two years, the share of home loans awarded for properties priced above R3 million has jumped by 20%, proving that mid-to-upper-tier buyers are making aggressive strategic moves.”
And the banks are fully aware of this momentum, Kotze said. He said even though lenders initially pushed up average deposit requirements across the board due to interest rate caution, the data shows a significant silver lining for entry-level professionals.
“While average deposits for all buyers spiked by 21% year-on-year, the increase for first-time buyers was kept to a much softer 7.3%.”
