Interest Rates Hold Steady

The South African Reserve Bank’s decision today to keep interest rates unchanged has brought a welcome dose of stability to the property market.

With interest rates holding steady, South Africa’s resilience continues to shine through. Despite ongoing economic pressures, the property market remains remarkably stable, underpinned by steady demand and a long-term outlook from both buyers and sellers. This consistency not only reflects the adaptability of South Africans, but also reinforces property as a dependable investment — one that continues to offer opportunity, even in a changing landscape.

After a prolonged period of elevated borrowing costs, demand is beginning to recover and price growth is stabilising. However, affordability remains a key constraint, with even small shifts in interest rates continuing to shape buyer activity.  “The impact of interest rates isn’t uniform across the market,” notes Rawson National Sales Manager, Craig Mott. “The more price-sensitive segments – particularly first-time buyers – tend to feel changes almost immediately, while the upper end of the market is generally less affected.”

Global pressures keeping rates in check
While the decision to hold rates offers short-term stability, it also reflects the broader pressures facing the economy.
“Stability is valuable in itself,” acknowledges Rawson Finance’s Leonard Kondowe. “It gives buyers a clearer picture of what their repayments will look like and allows them to plan with more confidence, even if rates haven’t started coming down yet.”

That said, rising fuel prices, ongoing geopolitical tensions, and currency volatility continue to fuel inflation concerns, limiting the Reserve Bank’s room to introduce rate cuts in the near term.

As a result, global economic shifts are filtering through into the local lending environment. “Changes in inflation, currency strength, and global interest rates all influence how banks assess risk and price home loans,” says Kondowe. “That ultimately affects both what buyers qualify for and the rates they’re offered.”

According to Kondowe, lending appetites remain healthy despite economic pressure. “Buyers with a strong financial profile, good credit record and manageable debt are still able to secure favourable rates,” he says.

Budget 2026: Subtle shifts with real impact
While the interest rate decision sets the immediate tone, this year’s Budget Speech introduced a number of changes that could support property activity over the medium term.

More flexibility for homeowners
One of the most notable updates is the increase in the primary residence capital gains tax (CGT) exclusion, which has been raised from R2 million to R3 million. “This is a meaningful adjustment for homeowners,” says Craig Mott. “It allows sellers to retain more of their profit when they sell, which can make it easier to upgrade, downscale, or reinvest in the market.” Rather than triggering a sudden surge in listings, Mott expects this change to encourage more gradual movement, particularly in the mid- to upper-market segments.

“What it really does is give homeowners more flexibility around timing,” Mott notes. “They’re able to make decisions based on their needs rather than being constrained by tax implications.”

Stability supports confidence
Alongside this, the absence of any changes to transfer duty thresholds provides a sense of continuity for buyers.
“In a market where affordability is already under pressure, policy stability is important,” says Mott. “Knowing what your upfront costs will be allows for better planning and more confident decision-making.”

Other measures – including full inflation adjustments to personal income tax brackets – are expected to provide modest relief to households, potentially improving affordability at the margins.

For investors and developers, the decision to maintain the corporate tax rate at 27% supports a more predictable investment environment, while the increased VAT threshold for small businesses may ease pressure on smaller operators within the property ecosystem.

Long-term gains through infrastructure
Looking further ahead, government’s commitment to significant infrastructure investment is expected to play a role in shaping property demand over time. “Large-scale infrastructure spending can support property values by improving accessibility and service delivery,” says Mott. “However, the benefits are likely to be gradual and will vary significantly depending on location.”

Proposed municipal reforms, which link funding to service delivery performance, could also help restore confidence in underperforming areas – although these changes are expected to take time to materialise.

Navigating the current market

For Buyers
For buyers, the combination of stabilising interest rates and improving sentiment presents opportunity – but careful planning remains essential.Rather than trying to perfectly time the market, Mott says the focus should remain on affordability, location, and long-term value.

“Sustainable buying decisions are far more important than short-term timing,” he explains. “If you’ve accounted for potential rate changes and chosen a property with strong fundamentals, you’re in a much better position to ride out uncertainty.”

From a financing perspective, Kondowe says preparation is also key. “Buyers should take the time to properly assess their affordability and stress-test their repayments,” he says. “Understanding how your bond would perform under different rate scenarios helps ensure you don’t overextend yourself.”

For Sellers
Sellers, meanwhile, are operating in a more competitive environment, where realistic pricing and strong presentation can make a significant difference. Positioning a property correctly from the outset – both in terms of pricing and condition – remains one of the most effective ways to attract serious buyers.

“In today’s market, it’s important to balance value with realism,” says Mott. “Well-priced properties that are presented professionally are far more likely to attract strong interest and achieve successful outcomes.”

For Homeowners
For existing homeowners, the current environment calls for a more proactive approach to managing finances.
Kondowe suggests regularly reviewing budgets, maintaining a financial buffer, and avoiding unnecessary debt to help reduce risk – particularly while interest rates remain elevated.

“Even in a stable rate environment, it’s important to be prepared,” says Kondowe. “Building in a financial buffer and keeping your debt manageable can make a big difference if conditions change.”

A steady path forward
All things considered, most experts agree that the outlook for South Africa’s property market remains one of gradual improvement.
“We expect a steady recovery over the next 6 to 12 months, with modest price growth and improving activity levels,” says Mott. “But external risks – particularly those affecting inflation and fuel prices – will continue to influence how quickly that recovery gains momentum.”

For now, the combination of rate stability, targeted tax relief, and improving sentiment is helping to lay the groundwork for a more balanced and resilient property market. One where informed, long-term decisions are likely to yield the strongest results