HEIBERG ESTATES NEWSLETTER: JULY 2026

Dear Property Partners

The South African property market continues to demonstrate resilience and steady growth, with favourable conditions for both buyers and sellers despite renewed headwinds from multiple directions. There is widespread relief among mortgage holders and prospective homebuyers that, despite the renewed volatility arising from the escalating Middle East conflict and growing geopolitical uncertainty, the South African Reserve Bank (SARB) has not increased the prime lending rate, as many had anticipated.

This decision underlines the importance of balancing inflationary risks with the need to stimulate economic activity, create sustainable employment, and maintain confidence in the South African property market. It reflects the SARB’s commitment to supporting household finances by avoiding higher monthly mortgage repayments while encouraging consumer spending to curb further economic stagnation. The repo rate remains at 7%, with the prime lending rate unchanged at 10.5%. Similarly, the Bank of England, Nigeria, Canada, and the US Federal Reserve also kept interest rates unchanged, while Japan, South Korea, Ethiopia, and the European Central Bank announced further increases.

Further encouraging news is that the rand has remained relatively resilient, trading broadly in line with its value against the US dollar at the beginning of the year and, until recently, performing more strongly against the euro. This has contributed to lower import costs, while excellent agricultural harvests have helped reduce the prices of certain food products. The stable interest rate environment should continue to provide buyers with greater confidence in their purchasing decisions, supporting sustained momentum across all sectors of the property market.

We are all aware that the Middle East conflict has disrupted global supply chains, resulting in widespread economic consequences, particularly through rising fuel prices. In South Africa, fuel has increased by more than R6 per litre since the conflict began. These developments continue to weigh heavily on our already modest economic growth, with GDP expanding by only 1.1% in 2025 and current forecasts for 2026 now ranging between 1.0% and 1.4%. Extensive second-round effects are still expected to filter through our fragile economy. The Reserve Bank’s restrictive monetary policy over the past few years has also contributed to prolonged economic stagnation, while both the International Monetary Fund and the World Bank have revised South Africa’s growth outlook downward to approximately 1.1% for the year. Collectively, these factors continue to place pressure on prospective buyers’ affordability as well as investor confidence in the property market.

Inflation remains an ongoing challenge, as it has over the past few years. The Bureau for Economic Research recently highlighted increasing inflationary pressures, not only in South Africa but across all net oil-importing countries. This has reinforced the general expectation that no further interest rate cuts are likely during the remainder of the year. According to Stats SA, inflation accelerated to 5% in June, its fastest pace in two years. This represents an increase of 0.5% from May and remains well above the SARB’s 3% target, with rising fuel costs being a significant contributor. On a year-on-year basis, fuel prices increased by 34.3% due largely to the Middle East conflict, with its ripple effects being felt throughout the economy. Consumers are undoubtedly experiencing the impact in their everyday living costs. Current forecasts suggest that inflation should average approximately 4% for the year.

Despite renewed international and domestic economic challenges, our property market and its investors continue to face these headwinds with resilience, reinforcing the long-standing view that property remains one of the safest and most reliable long-term investment assets. Some of the latest noteworthy facts and statistics include:

• Compared with ten years ago, South Africa’s property market has experienced an 18% decline in transaction volumes, remaining well below historical levels. Although the market continues to show resilience, this reflects the uncertainty among investors facing economic pressures, elevated interest rates, and the rising costs of living and municipal services.
• National house prices continue to record healthy annual growth of approximately 5%, reaching 5.2% in June. Although this is slightly lower than May’s 5.7%, house price growth continues to outperform inflation in several regions.
• The Western Cape, supported by excellent infrastructure, superior municipal service delivery, lifestyle appeal, and continued semigration, remains South Africa’s strongest-performing property market. Ongoing demand continues to exceed available supply, sustaining above-average price growth.
• Reverse semigration from the Western Cape to Gauteng has become an increasingly noticeable trend. Johannesburg and Pretoria are experiencing renewed momentum as more affordable property prices and improved employment opportunities attract buyers back. As a result, the Western Cape’s dominant market position may gradually come under pressure, potentially moderating future price growth.
• The “Wise Move 2026” South African Migration Report indicates that relocations from the Western Cape to Gauteng, as well as from KwaZulu-Natal to Gauteng, have recently grown at a faster pace than movement in the opposite direction. This bodes well for increased demand across residential and commercial property sectors. However, the sustainability of this trend will depend largely on improved municipal service delivery, which remains one of the key factors influencing purchasing decisions. Municipal dysfunction continues to be a significant constraint on economic growth across many regions of South Africa.
• The Western Cape residential market continues to outperform all other major metropolitan markets, recording consistent double-digit annual price growth. Between 2010 and 2022, residential property prices in Cape Town increased by 141%, compared with 71% in Johannesburg.
• Statistics South Africa reports that 25.4% of the country’s population now resides in Gauteng, while approximately 12% live in the Western Cape. Gauteng remains South Africa’s economic powerhouse, contributing nearly one-third of the national GDP and continuing to attract residents seeking employment opportunities.
• Market data also indicates that 25% fewer individuals between the ages of 26 and 35 are purchasing property compared with previous years, while the average age of homebuyers has increased to 36 years.
• First-time buyer participation has declined, with mortgage applications from this segment decreasing from 56% to 46%.
• The rental market continues to gain momentum, recording an average year-on-year rental increase of 4.1% in June, while vacancy rates continue to decline as affordability challenges and tighter lending conditions prevent many prospective buyers from entering the property market.
• The buy-to-let property investment market remains under pressure as rising inflation continues to erode household spending power. Many properties that are unable to sell are now entering the rental market, increasing supply and creating greater competition, with rental prices coming under pressure in certain areas.

Current market conditions remain encouraging for sellers, provided that properties are realistically priced, market-related, well maintained, and marketed by experienced, professional property practitioners. Buyers remain value-conscious, conducting thorough market research before committing to purchases. The stability of the current interest rate environment also enables buyers to undertake sound financial planning while securing favourable lending conditions. The moderation in house price growth reflects an increasingly challenging operating environment and South Africa’s subdued economic growth, both of which are expected to continue limiting real estate activity during the remainder of the year. However, lower stock levels across most property segments should provide some support against slowing demand, reduced sales volumes, and softer price growth.

Hopefully, the South African Reserve Bank will continue to maintain a more-or-less stable interest rate environment to support affordability, preserve market confidence, and sustain its current “wait-and-see” approach. We also remain hopeful that Eskom will continue to provide stable electricity supply and that our Government at all levels recognises the urgent need to build a capable state with efficient and sustainable service delivery, particularly in rural communities that support our larger cities. South Africa urgently requires sustainable job creation to strengthen household resilience, broaden our limited tax base, and stimulate long-term economic growth. A stronger economy will, in turn, continue to underpin a healthy and thriving South African property market.

Looking ahead, industry experts expect the South African property market to remain stable, although demand is likely to soften gradually during the remainder of 2026. Even so, the market continues to present excellent opportunities for both buyers and sellers. If you are considering buying or selling property, now is an excellent time to speak with your Heiberg Estates Team. With more than 50 years of collective experience, we are committed to providing professional guidance, trusted advice, and service excellence every step of your property journey.

Please visit our website for the latest property releases and opportunities: www.heibergestates.com and please do not hesitate to contact us should you wish to sell, buy or rent – we are 24/7 there for you!

Yours faithfully

Bambie & your Heiberg Estates Team