South Africa’s property market is currently being supported more by limited supply rather than by exceptionally strong buyer demand.
In a blog post published on Monday, May 18, MyProperty says residential construction activity remains subdued compared to the pre-2008 boom years, with higher building costs, slower development activity, and lingering supply chain pressures continuing to constrain new housing stock.
The independent property portal says construction material inflation has eased significantly from its pandemic-era highs, but building costs remain elevated overall. As a result, fewer new homes are entering the market, helping to support existing property values.
“FNB also notes that some homeowners may be holding back from selling in anticipation of weaker market conditions ahead, further reducing available stock.
“This dynamic is especially visible in higher-value property segments and lifestyle-driven areas where demand has remained relatively resilient.”
Apartments and townhouses continue gaining momentum
Changing household trends are also reshaping demand patterns across the country.
According to Census data referenced in the latest FNB Property Barometer, average household sizes in South Africa now sit between three and four people, supporting a growing shift towards sectional title living, apartments and townhouses.
This aligns with broader affordability pressures and lifestyle preferences, particularly among younger buyers and urban professionals looking for lower-maintenance, lock-up-and-go properties, MyProperty says.
It added that the report suggests these segments may continue outperforming parts of the traditional freehold market if affordability remains constrained.
Rental inflation is rising again
The portal says that another notable trend is the renewed increase in rental inflation.
National rental inflation accelerated to 4.0% in March 2026, while apartment rental inflation reached 5.1%.
The Western Cape continues to record some of the strongest rental growth in the country, with rental inflation rising from 5.4% in March 2025 to 6.9% in March 2026, the portal says.
Mpumalanga also recorded relatively strong rental inflation, while Gauteng, the Northern Cape, and the Free State saw slower rental growth.
“The rising cost of renting could increasingly influence the rent-versus-buy decision for many households, particularly if interest rates begin stabilising later in the cycle.
Innovative financing continues supporting buyers
“Despite affordability challenges, buyer activity continues to receive support from several financing innovations and changing lending trends.”
The report highlights factors such as:
•Longer home loan repayment terms
•Group or joint bond applications
•Youth-focused home loan products
•Government support measures
These changes have helped narrow the affordability gap for some buyers, particularly first-time purchasers entering the market, MyProperty says.
Higher-income households have also continued supporting market activity, partly due to positive wealth effects and stronger financial positioning, it says.
Global risks could become the biggest threat
While the underlying market remains relatively stable, FNB warns that global developments could start weighing more heavily on the local housing sector.
The ongoing conflict in the Middle East and the potential for higher oil prices and inflation are said to be increasing uncertainty around future interest rate movements and broader financial conditions.
“If inflation accelerates again or rate cuts are delayed, affordability pressure could return more aggressively and slow buyer demand.
“This is particularly important because the next phase of the market recovery was expected to rely more heavily on stronger demand growth rather than simply constrained supply.”
Impact on buyers and sellers
For sellers, current conditions are said to still favour realistic pricing and well-positioned properties, particularly in supply-constrained areas and popular lifestyle regions.
However, MyProperty says homes that are overpriced may face longer selling periods as buyers remain affordability-sensitive and increasingly cautious.
For buyers, the portal says the market still offers relatively balanced conditions compared to previous boom cycles. Financing innovations and improved affordability relative to the 2010s continue creating opportunities, especially in the sectional title and apartment segments, it adds.
At the same time, it says rising rental costs may encourage more households to consider buying sooner rather than later if borrowing conditions remain stable.
2026 outlook
Overall, the property portal says the South African property market remains resilient, but the pace of recovery is likely to become more moderate over time.
It says much will depend on:
•Inflation trends
•Interest rate movements
•Global economic stability
•Employment and wage growth
•Ongoing infrastructure and policy reforms
For now, it says constrained housing supply continues providing an important support floor for the market, even as broader economic uncertainty begins to grow.
Interest rates: the most significant force impacting SA’s financial landscape
Interest rates remain one of the most significant forces impacting SA’s financial landscape, with its ripple effect felt across numerous financial markets, including home loans.
South Africa is preparing for the upcoming interest rate announcement by the South African Reserve Bank (SARB) on 28 May.
According to Adrian Goslett, CEO and regional director of REMAX Southern Africa, interest rates are not a standalone factor but rather a key driver that influences a wide range of economic factors, particularly borrowing costs.
“When rates increase, it becomes more costly for consumers to take on loans, resulting in slower spending and reduced buyer demand in certain property markets. On the other hand, lower rates tend to improve affordability and stimulate market activity.”
The real estate agency says the SARB uses interest rates as a primary monetary policy tool to manage inflation and stabilise the South African economy. Previously, the target was within the range of 3% to 6%. However, this was tightened to 3% after a 2025 review, aligning with the global standard.
Property market highly sensitive to monetary policy decisions
“As interest rates change, it makes it more or less expensive to finance a home loan. This dynamic makes the property market highly sensitive to monetary policy decisions, reinforcing the importance of keeping a close eye on interest rate trends if you either own a home or are in the market to buy or sell a home,” says Goslett.
While home loans are often seen as a structured way to finance property ownership, they are greatly interlinked with the broader economic environment. By understanding how interest rates shape borrowing conditions, South Africans can make more informed decisions regarding their property journey, he adds.
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