The South African Reserve Bank’s (SARB’s) recent decision to hold interest rates may have preserved billions of Rands in property market activity.
Last week, the Monetary Policy Committee (MPC) left the repo rate unchanged at 7% in another split vote, with only two of the six members favouring a further 25-bps hike.
Interest rates do not just affect bond repayments, but also affect whether property transactions happen at all, Nic Tromp, the CFO and partner at BLOK.
He says when the SARB began cutting rates in late 2024, home loan applications surged and transaction activity started recovering.
“By holding the prime rate at 10.50% instead of increasing it by 25 basis points, the MPC may have avoided removing an estimated R3-4 billion of residential transaction value from the market every month,” Tromp says.
Higher interest rates suppress affordability, confidence and ultimately liquidity
According to the CFO at Blok, an urban precinct property developer, higher interest rates suppress affordability, confidence and ultimately liquidity.
“The biggest impact of interest rates isn’t on property prices. It’s on the number of buyers willing and able to transact.”
Access to property ownership has long been one of the most reliable pathways to wealth creation, yet for many aspiring homeowners and property entrepreneurs, the door to this market remains firmly closed, wrote Letlatsa Lekhelebana, client coverage regional manager at TUHF Capital.
He said the issue is often a lack of accessible, flexible financing. Innovative finance plays a critical role in changing this reality, unlocking participation, and enabling both new entrants and established players to grow, he added.
Innovative finance solutions should be mindful of the equity gaps barring many new property market entrants
“Innovative finance solutions should be mindful of the equity gaps that exist for many new property market entrants. Subsidy programmes and equity funds – like our Inthuthuko Equity Fund-can help bridge the gap for first-time buyers and emerging investors, reducing risk and encouraging broader participation.
“When stakeholders collaborate effectively, the result is a more inclusive and resilient property market.”
Last week, we reported that the composition of inflation shows that the fastest price increases are occurring in the essential costs associated with owning or renting a home, steadily eroding housing affordability.
Housing affordability should no longer be measured simply by comparing house prices with household incomes, said Francois Viruly, the chief economist at Datazone.
He added that the true cost of housing includes transport, electricity, municipal charges, water, insurance and other unavoidable living expenses.
Households have less disposable income available for housing
When these costs rise together, households have less disposable income available for housing, making both home ownership and renting progressively less affordable, Viruly added.
The chief economist said South Africa’s June 2026 Consumer Price Index (CPI) reveals that rising living costs are placing increasing pressure on households.
According to Statistics South Africa(Stats SA), headline inflation has risen to 5.0% in June and, although it remains within the South African Reserve Bank’s target range of 3% to 6%, it is continuing to trend towards the upper end of the target range.
Without innovation, the regional manager says the market will struggle to grow, with fewer new entrants and increasing pressure on existing participants.
He adds that younger generations will continue to enter the market later, if at all, while demand stagnates and confidence declines. Over time, this could lead to greater reliance on state-supported housing and increased strain on public resources, he added.
The township-based property entrepreneurs financier said that with the right approach, the opposite is possible. It said a market that embraces innovative finance can become more dynamic, inclusive, and sustainable.
It can support a new generation of property entrepreneurs – individuals who not only build wealth for themselves but also contribute to addressing broader housing challenges, the company said.
Opening up the property market is not about lowering standards or increasing risk
“Ultimately, opening up the property market is not about lowering standards or increasing risk. It is about rethinking how risk is shared, how affordability is structured, and how opportunity is distributed. Innovative finance is the bridge between potential and participation, and it is one of the most powerful tools we have to build a more accessible and thriving property sector,” Lekhelebana said.
