HEIBERG ESTATES NEWSLETTER: JUNE 2026
Dear Property Partners
As reported in recent Heiberg Estates monthly newsletters, there has been noticeable positive growth momentum in our property market since around October last year. Unfortunately, the Middle East conflict started with escalating local- as well as international economic challenges, causing renewed concern of the impact thereof on our property market as well. The fuel price was around USD 60 per barrel when the conflict started, and at some stage increased to more than USD 100 per barrel, which had knock-on effects and caused our producer price inflation rate to escalate by 3% from April to May 2026. The PPI has lately been recorded at around 7.8%. Fortunately, oil prices have dropped with what seems to be the end of the Middle East conflict, and may it hold with no further flare-ups!
The SA Reserve Bank increased the repo rate last month with 25 basic points in its bid to return and to anchor inflation to the bank’s 3% target, with a probable further increase expected in July, resulting in a knock-on effect on home loans and other consumer debt repayments. The SA Chamber of Commerce and Industry is now forecasting an average inflation rate of 4.9% by the third quarter as the rising oil price shock, is now filtering throughout all sectors of our economy.
Fortunately, there is still a lot of positive news for the overall good performance of the economy and also for our property market. Our GDP did show 0.5% growth, which is the 6th consecutive quarterly growth; there was strong export performance, our exchange rate was more or less stable, whilst the contained inflation rate is helping economic fundamentals and sustained confidence in our SA Property Market. Our recent credit rating upgrades by Fitch, Moody and S&P Global Ratings is to be noted after a decade of negative ratings, which should contribute to South Africa again regaining its investment grade status. South Africa is only the second in the Group of 20 countries that has been upgraded by Fitch this year, due to our country’s improved finances, our prudent fiscal management, and progress on fiscal consolidation. Furthermore, SA is only one of two G20 countries with a positive outlook at S&P and the only country at Moody’s that has upgraded the state debt from stable to positive. This status quo is of great importance to attract renewed foreign investment, also so much needed for job creation in our economy in order to put people in a favourable position to invest in property. Our rand has remained resilient in spite of the Middle East conflict and is more or less around 9% stronger against the US Dollar versus a year ago.
We are now entering the traditional slower cycle of property enquiries and sales during the winter months, and Sellers should be aware to price their homes realistically to align asking prices with market values, rather than opting for speculative expectations as people shop by comparison and are well-informed. Rentals are again on the increase due to demographic and affordability dynamics. There is a present growing wait-and-see attitude with the latest increasing economic uncertainties and challenges. Rental demand has been on the increase as buyers are delaying their purchases until interest rates stabilize again. The transition from renting to ownership is weakening, and it is wise for Landlords to balance higher bond repayments with tenant retention. This as a result of so many rental properties available and competing for the best value for money in all property sectors.
Some of the latest interesting facts and statistics, as follows:
- It is regarded as a given that the world will have a lower 2026 economic growth rate than initially forecasted, especially with the higher fuel price and its impact on the worldwide economy, which is still to be determined. This state of affairs, most likely leading to at least another interest rate increase this year in our country, will impact on all our industry and business sectors, and also on our property market, which is heavily credit-driven.
- The impact of the Middle East conflict has dimmed our economic growth expectations for 2026, and the International Monetary Fund has cut its forecast to 1% versus its initial 1.4% forecast for this year. Second-round effects are starting to impact consumers and their ability to invest in property, especially those buyers in the lower price ranges.
- The prime rate of 10.5% is still at the lowest level in two years but is expected to be increased by .25% at the next SA Reserve Bank meeting in July which will put further downward pressure on consumers and their ability to invest in property. We are still seeing good movement in all property sectors at the moment, as buyers are making use of the existing favourable loan environment with good bond application approvals and lower deposit requirements, whilst qualifying buyers can still secure interest rate concessions.
- Home loan applications are still growing steadily, and with a year-on-year growth rate of 6.2% recorded, suggesting healthy and ongoing demand.
- BetterBond Property Brief, points out that average home prices have steadily increased over the past 12 months in single figures, but with average first-time buyers the winners with price increases recorded at 10.3%.
- The impact of rising interest rates is mostly affecting first-time buyers as borrowing costs increase, there are higher deposit requirements of around 33% quarter-on-quarter, putting further pressure on entry-level property affordability.
- The Construction Industry also took a knock with a very low 0.2% growth rate recorded last quarter. The 50% decrease in the value of approved building plans over the past decade, has to be noted. During 2016 the average monthly value was just over R43 billion, but lately that figure has decreased and averaging R22.4 billion. A light in the tunnel is that new job opportunities created in this industry year-on-year, have still increased by more or less 6%.
- The SA Reserve Bank has lifted its inflation outlook for this year to 4.4% year-on-year, an increase of 0.7% since its March meeting. Its quarterly projection shows the repo rate at a predicted 6.7% at the end of the year, especially with second-round price increases due to the rising oil price. The average inflation forecast for next year is expected to be around 3.7%, before getting closer to the 3% target in 2028.
- Tightening financial conditions impose material constraints, and the share of rental households vs ownership increased from 21.9% in 2019 to 25.8% as recorded last year, which is more or less 1.4 million additional rental households. This illustrates the pendulum keeping momentum shifting towards increasing and ongoing rental demands – once again as observed lately after the impact of the Middle East conflict, gaining renewed momentum.
- The buy-to-let property segment and continuous demands, especially in the Western Cape, as well as high growth-areas such as student housing hubs and economic corridors, offset rental property rate pressure where demand has been exceeding supply for some years now.
Well-known economist, John Loos, reports that over the past ten years nominal property prices have increased, but inflation-adjusted property values were limited. Therefore, a property investment should be regarded as a long-term asset that delivers value through stability, lifestyle benefits, and rental income. Property remains a resilient asset class, whilst it is important to align location, economic conditions, and timing to unlock the best possible opportunities, as well as applying financial budgeting discipline and pro-active financial management.
Fortunately, the macroeconomy has time and again proven our resilience to global challenges, our terms of trade remain elevated as seen by favourable prices for key exports. Ongoing and sustained property demand continues to support long-term investment viability in especially well-selected areas, and as proven over and over again, our broader property market’s ability to adapt to challenges outweighs economic pressure. We are aware that property is fundamentally a credit-driven asset class where interest rates, affordability confidence, and general economic conditions play a huge role in transaction activity as well as in pricing, but our nation has proven itself to adapt quickly to changing conditions in the process of upgrading or downgrading their property investment prospects.
Our SA Property Market is holding its ground, thanks to sound fundamentals and despite affordability pressures. Overall, we remain cautiously optimistic as sustained Buyer demand should continue to support our real estate market. So don’t hesitate to contact your Heiberg Estates Team, who remain on 24/7 standby for you – whether you want to sell, buy, or rent! We are there for you!
With best and warm wishes.
Yours faithfully
Bambie and Heiberg Estates Team
