The South African residential property market’s activity and sentiment cooled slightly in the second quarter of this year compared to the first quarter.
Commenting about the latest FNB Estate Agents Survey, Siphamandla Mkhwanazi, the senior economist at FNB said while the affordable housing segment continues to show resilience, overall momentum has softened, influenced by seasonal factors and heightened uncertainty.
“Regional dynamics presented a mixed picture, with some areas seeing improved activity despite declining sentiment, and vice versa,” Mkhwanazi said.
He said estate agents reported that market activity experienced a modest decline in the second quarter of this year, with the Activity Index falling slightly to 5.9 (from 6.3 in the first quarter).
The senior economist said this indicates a modest cooling in market momentum. “The affordable housing market (R750k) maintained a higher activity level at 6.2, compared to 5.8 in the traditional market, continuing the trend of a stronger performance in the lower-priced segments.”
The percentage of agents reporting a highly active market (score 8 to 10) dropped to 17% from 23% in the previous quarter. Regional activity trends were mixed.
Looking ahead to the third quarter, the survey said overall agent expectations for increased market activity have notably softened, with only 34% anticipating growth, a significant drop from 46% in the prior quarter.
However, the affordable market is said to remain relatively optimistic, with 66% of agents expecting higher activity, likely buoyed by the recent interest rate cut.
In contrast, expectations for the traditional market dropped sharply to 23%. Seasonality (winter slowdown) and broader economic stress were cited as key dampening factors for the upcoming quarter.
In the sentiment and regional dynamics, agent satisfaction with current market conditions softened to 62% down from 68% in the previous quarter. This overall decline in sentiment was uniform across all price segments, except in the affordable market where it climbed from 58% to 72%, the highest across price segments.
Confidence remained strong in the R2.6 to R3.6 million price range, recording 70% satisfaction, albeit a decrease from 84% and weakest in the R750k – R1.6 million segment, where it notably declined from 59% to 45%.
The regional performance revealed distinct patterns in both market activity and agent sentiment. In Gauteng, the activity index registered 5.7, a slight decline from 6.1.
Concurrently, agent satisfaction in Gauteng experienced a notable drop of nine percentage points, falling to 66% from 75%, partly reflecting disruptions related to the temporary Deeds Office closure in Johannesburg.
Despite this softening, Gauteng still maintains the highest overall agent satisfaction among the regions.
The Western Cape saw its activity index at 5.9, a notable decline from 7.2 in the previous quarter. However, sentiment in the Western Cape remained remarkably stable at 67%, only a marginal decrease from 68%, solidifying its position as a consistently strong performer with resilient agent confidence.
Conversely, KwaZulu-Natal (KZN) presented a contrasting picture, where market activity actually improved to 6.3 in the second quarter from 5.9 in the first one.
Despite this uptick in activity, agent sentiment in KZN experienced a marginal decline to 47% from 49%, likely due to persistent infrastructure challenges weighing on overall confidence.
The Eastern Cape also witnessed an improvement in activity, with its index rising to 6.1 from 5.9. Yet, this positive activity trend was said to be accompanied by a significant drop in agent sentiment, falling by ten percentage points to 56% from 66%.
“This suggests a disconnect where transaction levels increased but agents’ underlying confidence in market conditions or future prospects in the region waned.”
With regards to selling times, the average time properties spent on the market remained unchanged in the second quarter at 12 weeks and one day, consistent with the first quarter.
The shortest selling time was observed in the R1.6 to R2.6 million segment, at ten weeks, an improvement from ten weeks and five days. Conversely, properties in the R750k segment experienced longer selling times, increasing from 11 weeks and one day to 14 weeks.
Price drops remained prevalent in the market, with 75% of properties selling below their asking price, a slight improvement from 78%. Sellers in the affordable market, in particular, had to drop prices by an average of 11%, although significantly fewer properties (42%) sell below asking prices, compared to 86% in the traditional market.
Overall, price reductions averaged 9%, consistent with the long-term average. Only 1% of sales exceeded the asking price, mostly in the affordable markets where supply is constrained, underscoring continued buyer caution and price sensitivity.
The survey highlights that financial pressures continue to be a significant motivation for selling property as financially pressured sales accounted for 21% of sales, a marginal decrease from 22%, but still indicating elevated levels of distressed selling.
Life-stage downscaling remained a primary driver, accounting for 24% of sales, consistent with the previous quarter and highlighting a steady flow of property transactions from retirees and those adjusting living situations.
Emigration-related sales remained low at 5%, consistent with the first quarter and below the long-term average of 8%, suggesting that emigration pressures continue to be diminished.
Upgrading activity remained stable at 12% of sales, showing no significant signs of sustained improvement despite lower borrowing costs.
First-time buyers represented 19% of buyers in the traditional market and a significant 46% in the affordable market (up from 40%), indicating their increasing presence in the lower-price segments. Overall, first-time buyers accounted for 26% of the second quarter’s activity, up from 24% in the first one.
Buy-to-let investors accounted for 12% of overall transactions, up from 10%, with higher activity in the affordable segment at 19%, compared to 6% in the traditional market.
Mkhwanazi said the results of the 2Q25 Estate Agents Survey reflect a market navigating a complex landscape shaped by seasonal shifts and broader economic headwinds.
He said heightened global and domestic uncertainty-particularly surrounding the stability of the Government of National Unity (GNU)-likely contributed to the softening in sentiment and the cautious outlook observed among agents.
“Encouragingly, some of this uncertainty has subsequently eased, offering a more stable backdrop for market participants. Recent interest rate cuts have provided a tangible boost to activity in the affordable housing segment, where both buyer demand and agent optimism remain relatively strong,” Mkhwanazi said.
He added that looking ahead, continued rate relief is expected to support buying activity, especially in the low- to mid-market segments.
However, he said unlocking sustained momentum in the higher-priced tiers will require accelerated economic reforms and greater political clarity to restore confidence and drive broader market recovery.
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