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South Africa’s residential property market is holding firm despite the 25-basis-point rise in the prime lending rate to 10.5%, according to BetterBond’s July 2026 Property Brief. Improving economic conditions, lower fuel prices, and resilient buyer demand are keeping activity above two years ago, even as borrowing costs weigh on affordability.
The wider economic backdrop is turning more supportive. Real GDP grew 1.4% year-on-year in the first quarter, and June brought a run of good news on costs. The diesel price has fallen 19.8% since May, while Brent crude is down 37% since the beginning of that month. A stronger, steadier rand, up 8% against the US dollar over the year, is easing pressure on imported-goods inflation. Economist Dr Roelof Botha notes that a stable or modestly stronger rand could place downward pressure on domestic inflation and may even support a resumption of the rate-cutting cycle later in 2026 or early in 2027.
The lending data reflects a market that has cooled but not stalled. Although year-on-year growth in home loan applications slipped by 1.6% in Q2 as higher rates and deposit requirements bit, the BetterBond Index remains 5.7% above its level two years ago, suggesting that the recovery, which began late in 2024, is still largely intact.
House prices continue to outpace inflation. The average home price for all buyers reached R1.7 million in Q2, with nominal growth of 8.4%, while first-time buyers averaged R1.4 million. The residential property price index rose 7.5% year-on-year, more than double the 3.5% consumer inflation rate. Four regions recorded double-digit price growth over the 12 months to June, led by Mpumalanga at 13.7%, while the Western Cape’s 13% increase lifted the province’s average price to R2.4 million.
Encouragingly for first-time buyers, deposit requirements have eased. After ballooning above R300,000, the average deposit for all buyers has fallen 16% since April, and by 12% for first-time buyers. The average first-time buyer deposit has dropped 29% since March 2024, from R230,000 to R163,000, a welcome development at a time of higher rates.
Buyer finances are also strengthening. First-time buyer salaries have grown 15.5% over four years, against just 2.8% for the formal sector, and the average income of all homebuyers now sits just below R69,000 a month. The number of loans granted rose 5.8% over the past year.
Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond, sums up the outlook: “Although higher interest rates have slowed market activity, the underlying fundamentals remain encouraging. Improving affordability, easing deposit requirements and resilient demand continue to support the residential property market, while a more favourable inflation outlook offers renewed optimism for buyers in the months ahead.”
