Editor
The South African Reserve Bank’s Monetary Policy Committee has opted to keep the repo rate unchanged at 6.75%, leaving the prime lending rate at 10.25%. While the decision tempers earlier hopes of further rate cuts this year, property industry leaders say the market remains resilient – and that stability, for now, is good enough.
After a 25-basis-point cut in November 2025 that stoked optimism about a sustained easing cycle, the Reserve Bank pumped the brakes at its latest MPC meeting, citing rising oil prices, renewed geopolitical tensions in the Middle East, and the risk of a fresh inflation uptick.
Stability is the new cut
Myles Wakefield, CEO of Wakefields Real Estate, framed the hold as a net positive. “For the property market, a steady rate environment provides clarity. Buyers can plan with confidence, knowing that borrowing costs are not shifting unpredictably. Sellers benefit too, as stable conditions tend to support consistent demand rather than creating hesitation.” Despite the hold, he noted that rates remain lower than a year ago, and that committed buyers continue to transact regardless. “In real estate, certainty often matters more than direction,” he said.
Don’t mistake demand for permission to raise prices
Stephen Whitcombe, MD of FIRZT Realty, struck a cautionary note for sellers. Rates are 150 basis points lower than this time last year, and inflation is at 3.0%, precisely on the Reserve Bank’s new target, but buyers remain disciplined. “The past few years have taught consumers painful lessons about over-extending themselves during periods of low interest rates, and prospective buyers are now far more disciplined, focusing on what they can comfortably afford over the long term rather than stretching to meet inflated asking prices.”
Whitcombe cited the Competition Commission’s most recent Cost of Living Report to illustrate ongoing household pressure: electricity prices are 68% higher than five years ago, water tariffs are up 50%, and transport, education and health costs have all risen sharply. Even so, the Absa Homeowner Sentiment Index shows overall confidence at 87% – the highest in several years. “Pricing discipline is now the critical factor separating homes that sell quickly from those that linger,” he said. “Price conservatively and focus on offering the best value for money in your immediate area.”
Record purchase prices and a surge in zero-deposit bonds
Rhys Dyer, CEO of the ooba Group, said the local residential market has shrugged off the global noise. “South Africa has seen a notable improvement in key economic indicators, including lower inflation and stronger-than-expected GDP growth. However, global risks continue to drive uncertainty in inflation and interest rate expectations.”
The ooba data backs this up: the average national purchase price reached a record R1.75 million in February 2026, up 6.5% year-on-year, while zero-deposit and cost-inclusive bonds now account for 66% of total applications. Dyer also flagged a proposed SARB reform to replace the prime lending rate with the repo rate as the benchmark for loans, “a significant shift to the financial system which has in fact been in play for 25 years”, urging that any transition be carefully managed.
Hold expected – but cuts could return later in the year
Neil Abernethy, spokesman for Tyson Properties, said the wait-and-see approach was entirely expected. “What we are unlikely to see is a repo rate increase as all are aware that we need to make it as easy as possible for South Africans to ride out this unfortunate period. As things stand, even at $100 per barrel, the high oil price is unlikely to put too much pressure on the Reserve Bank’s new 3% inflation target and its one-percentage-point tolerance band.” Most analysts had expected at least 50 more basis points of cuts in 2026 before Middle East tensions escalated; Abernethy now puts further easing no earlier than the fourth quarter.
Stephan Potgieter, CEO of BetterBond, said he remained encouraged. “The country’s real GDP growth is projected at around 1.5% this year, rising to approximately 1.8% in 2027.” BetterBond home loan applications were up 2.8% year-on-year in January alongside improving approval ratios. “House prices have continued to rise at a steady pace, with average prices up 4.1% year-on-year, while affordability has been supported by rising real incomes and lower deposit levels.”
The long view: ‘Cold War number two’
Speaking at the Real Estate Industry Summit (REIS), John Loos, an independent economist, placed the current uncertainty in a longer historical context. “A repo rate cut looked very promising at the beginning of the year, but we’re in that stage at the moment in the world economy where it’s volatile and uncertain. This is not new. The world tends to go through these super cycles.” Drawing parallels with the oil shocks and geopolitical fractures of the 1970s and 80s, he described the current environment as “almost Cold War number two.” His forecast: rates on hold for 2026, with a possible cut in 2027. “If we can get through a mild inflation rebound that’s not too severe, we could have a reduction next year.”
In summary
The MPC’s decision to hold the repo rate reflects a cautious response to renewed global uncertainty driven by Middle East tensions and rising oil prices, rather than any deterioration in South Africa’s domestic economy. GDP growth is improving, inflation is on target, and the housing market is posting record purchase prices and stronger lending activity. Industry leaders are broadly optimistic but urge sellers to keep pricing realistic amid stretched household budgets. Further rate cuts – which most analysts expected earlier in the year – are now unlikely before the fourth quarter of 2026 at the earliest, with 2027 looking more probable for the next move down.
