MAIN IMAGE: Dr Andrew Golding – chief executive of the Pam Golding Property group
Pam Golding
On the back of November’s (2025) interest rate reduction – with further cuts anticipated by mid-2026, and supported by a new 3% inflation target indicating greater price stability, increased affordability for home loan seekers and a stronger lending appetite by the banks, together with South Africa’s removal from the FATF Grey List and, notably, S&P’s first credit rating upgrade in 20 years, 2025 draws to a distinctly more buoyant close.
By lowering the inflation target to 3%, the Reserve Bank aims to anchor inflation expectations more firmly, thereby creating scope for further interest rate cuts (possibly 75bps) according to the latest forecasts. This will reduce home loan costs, stimulate demand and enhance banks’ willingness to lend.
All these increasingly positive macroeconomic indicators further boost market confidence, with spin-offs in turn for favourable sentiment and increased activity in the housing market.
House price inflation
Encouragingly, from an investor and homeowner perspective, the national recovery in house prices is evident across all three major regional housing markets, with the Western Cape, which led the recovery, continuing to register the strongest price growth.
SOURCE: Pam Golding Residential Property Index
According to the Pam Golding Residential Property Index, the top price band continues to register the strongest price growth for the fourth consecutive year. Year-to-date, house price inflation (HPI) for >R3 million homes has averaged +4.96% (Jan-Oct’25) while the slowest growth has been recorded by homes priced below R1 million at 2.31% during the same period.
SOURCE: Pam Golding Residential Property Index
HPI in Metro markets
Among metro housing markets, Cape Town was the first to recover. While it remains the primary engine of the recovery, Tshwane is also making a solid contribution, and the recovery has now spread to all metro markets. Year-to-date, Cape Town continues to outperform other major metro housing markets in terms of HPI by a wide margin while two of Gauteng’s three metro markets – Johannesburg and Ekurhuleni – continue to lag.
Within Gauteng, house price inflation (HPI) in Tshwanecontinues to outperform relative to the two other metro housing markets. Prices are strengthening in all three coastal metro markets.
SOURCE: Lightstone
While national volumes have not fully recovered to pre-2008 levels, the Western Cape has registered a recovery in sales volumes based on a 2008 benchmark. While most positive changes are from this province, Limpopo has also shown gains.
Notably, despite accounting for just 1.3% of total national sales (by value), house prices in Limpopo are soaring, and in this regard, for the year-to-date, Limpopo is second only to the Western Cape among SA’s regional markets.
The graph below highlights the significant outperformance of the Western Cape market in terms of sales volume. While already evident that this region is outperforming in terms of price, it is also clear that the influx of semigrants is indeed significantly impacting activity too.
SOURCE: Lightstone
Luxury market
The luxury (and lower-end) of the residential property market is likely to perform best next year (2026). In the luxury market, demand is being driven by returning expat South Africans, reduced emigration, and the relocation of affluent buyers from the interior provinces to coastal regions. While the latter benefits the Western Cape, Gauteng’s luxury market is benefiting from the return of international buyers, particularly from across Africa.
Foreign buyers
Foreign buyers, including returning SA expats and purchasers/investors from elsewhere on the African continent, continue to show increased interest in acquiring residential property across all price bands in numerous regions. While from countries around the world, these purchasers originate mainly from the UK, Germany, Zimbabwe, USA, Netherlands, Switzerland, China, Mozambique, Congo and France.
First-time buyers
Recent interest rate cuts, fuel price reductions during the year and subdued inflation continue to underpin first-time buyer (FTB) demand, which continues to strengthen, rising to 47.8% of all applications received by ooba Home Loans in Oct’25 and averaging 47% for 2025 to date.
Source: ooba Home Loans
FTB applications increased in three of the nine regions monitored by ooba Home Loans in Oct’25, with a marked increase in FTB demand evident in Johannesburgin both September and October, with FTBs accounting for 51.7% of all applications received last month. Year to date, FTB demand was strongest in the Free State(60.3% of applications) and Mpumalanga(55.8%). Growth in the average price paid by FTB in 2025 to date remains strongest in Tshwane (+12.4%) and Eastern Cape (+11.5%).
Female buyers
Over the past decade, women have emerged as dominant players in South Africa’s residential property landscape, accounting for nearly 60% of ownership either independently or jointly. Notably, female first-time buyers now outnumber males, with 53% purchasing solo in 2025 compared to 46.3% in 2015 (ooba Home Loans). This shift reflects broader socio-economic trends: women’s average gross income has grown by 76.3% over the past 10 years, enabling more independent purchases.
Banks remain supportive
- The average national concession relative to primenarrowed to -0.63% in Oct’25. The Western Cape(-0.89%) and Eastern Cape (-0.76%) continued to register the most competitively priced home loans during the year to Oct’25.
- The overall approval ratehas drifted higher in recent months, averaging 84.2% in the past three months. Despite a sharp increase in the approval rate for buyers withoutpre-qualification (80.9% 3m MA), pre-qualified applicantscontinue to enjoy a far higher approval rate (91.1%).
- Meanwhile, the demand for 100% and >100% loans continues to rise. Applications for 100% loansrose to 55.6% in Q3’25, above Q1’24 lows but well below the mid-2020 peak of 67.5% of total applications. Demand for >100% loansrose to an all-time high of 6.6% in Q3’25.
- The average national deposit (as % of purchase price) eased in Oct’25, declining to 14.0% from 14.3% in Sep’25. In contrast, deposits paid by first-time buyersare drifting lower once more, easing to 9.4% in Oct’25 (6m MA).
Age of buyers
South Africa is part of a global trend in which people are buying homes later, with the average age of first-time buyers rising. As a result, the average age of residential property buyers is rising.
SOURCE: Lightstone
According to Lightstone, the percentage of buyers who are over 60 years has doubled since 2000, while those under the age of 35 has declined from around 45% in 2000 to just 30% in 2025. As a result, the percentage of buyers aged between 35-60 has increased from half in 2000 to 70% in 2025.
Policies such as offering assistance to first-time buyers, lower required deposits, more supply of affordable housing, and improving access to credit can help shift buying patterns, but even in markets with such strategies, ages are still rising. This trend impacts housing markets, and even more so in a country such as South Africa with an increasing and mostly young population.
Investment buyers
According to ooba Home Loans, the demand for investment / buy-to-rentproperties ticked higher in Oct’25, rising to 13.2% of all applications Investment demand remains elevated in the Western Cape, at 35.8% of applications in Oct’25 and remained steady at 13% in Tshwane.
Building plans passed
There has been a recovery in the number of residential building plans passed in SA since early 2025. This is primarily being led by the Western Cape, which is seeing a marked increase in the number of planned flats and townhouses. This trend also reflects the increase in mixed-use developments driven by affordability issues, the rising cost of land in business nodes, security concerns, and lifestyle preferences such as lock-and-leave.
SOURCE: Statistics South Africa
Shift in building plans passed to sectional title homes
A young urbanising population, coupled with a shortage of vacant land, growing congestion, rising building costs and changing lifestyles, is seeing a steady shift in building plans passed towards sectional title homes.
The percentage of residential building plans passed for sectional title homes has risen from just 13.6% in 2000 to a peak of 48.1% in 2020, and is currently 42.9% (Jan – Aug’25). The decline in the post-COVID years is presumably due, in part, to the shift to smaller towns and villages, or peripheral suburbs, during the switch to work-from-home, as well as semigration. As people move out of urban nodes, they can afford freehold homes.
SOURCE: Statistics South Africa
Growth areas
Areas like the Garden Route continue to benefit from the semigration to the Western Cape and the shift in those relocating to the province from Cape Town to smaller towns and villages. In addition to the Garden Route, other areas which are benefiting are the Western Cape’s Stellenbosch, Paarl and Franschhoek, and cities along the Whale Coast.
Outlook for 2026
The positive effects of a series of interest rate cuts, still subdued price pressures, and significant fuel price reductions during 2025 on household finances have already boosted activity and price growth in the national housing market.
While it is particularly difficult to forecast with any accuracy at the moment, it seems likely that the pace of local economic activity will strengthen somewhat next year and that there may well be further interest rate relief during the first half of 2026.
If international oil prices remain subdued and the rand remains resilient, local price pressures should subside further, providing an additional boost to household finances and, in turn, the housing market.
News that SA has been removed from the Financial Action Task Force (FATF) grey list in Oct’25 has boosted investor sentiment, particularly among foreign buyers. The delisting is expected to streamline property transactions, reduce compliance costs, and catalyse renewed interest in high-end real estate.
Overall, while the market is stabilising and showing pockets of vibrancy, a sustained recovery will depend on broader economic improvements, policy certainty and continued financial sector support. The local elections next year (2026) could go some way towards boosting consumer confidence, particularly in Gauteng, which has seen its housing market come under pressure due to the ongoing failure of service delivery. This is also true of most other housing markets in SA outside the Western Cape.
2026 looks set to offer good prospects in the property market, as interest rates continue to decline and SA’s GDP and revenue collections continue to increase, providing a stable and encouraging outlook for 2026.
