South Africa’s housing market is increasingly relying on wealthier and cash-backed buyers. First-time buyers made up only 26% of activity in FNB’s latest Residential Property Barometer, down from 32% in May, as higher borrowing costs and weak income growth strain household budgets.
Financing costs rose again on 23 September, when the South African Reserve Bank lifted the repo rate by 25 basis points to 7.25%, taking prime to 10.75%. It was the second increase this year, after May’s hike to 7%, the first since 2023. Governor Lesetja Kganyago pointed to a fuel-price shock that had intensified rather than eased.
So far, prices are holding up. FNB’s house price index rose 4.9% year on year in August, slowing from 5.3% in July. The bank expects growth to settle near 4.5% for the rest of 2026, with transaction volumes rather than prices taking most of the strain.
The survey shows homes selling faster even as fewer buyers qualify. Agents rated current activity at 5.7 out of 10, down from 6, and only 15% described the market as highly active.
Price band is the clearest dividing line. Homes priced above R3.6m recorded the strongest activity rating, at 6.3 out of 10, supported by cash-rich and financially resilient buyers. Properties below R750,000 take the longest to sell, at 11 weeks and two days. The middle market remains caught between debt-servicing costs and weak wage growth. BetterBond’s latest brief found that average prices paid by first-time buyers rose 8% year on year, which pushes the entry cost higher for those still trying to buy.
Location adds another split. Western Cape homes sell in an average of four weeks and six days, compared with 12 weeks and four days in Gauteng, where 83% of sales close below the asking price. Statistics South Africa data shows how far the Western Cape has pulled ahead. The province contributed 3.5 percentage points of a 6.8% national price growth rate in late 2025. Freehold prices rose 9.9% year on year in January 2026, against 5.5% for sectional title.
The economic backdrop offers little relief. GDP contracted 0.2% quarter on quarter in the second quarter, and the Reserve Bank cut its 2026 growth forecast to 1.2% from 1.4%. Headline inflation rose to 4.4% in August, while petrol rose R1.34 a litre and diesel R3.15 a litre in September. Adjusted for inflation, the average house price in October 2025 was still 1.4% below its January 2010 level.
Pam Golding Properties chief executive Andrew Golding said the latest hike would add pressure and that buyers needed to weigh financing costs carefully. He did not expect it to change underlying demand for well-located homes. The Reserve Bank’s projection model points to a broadly stable policy rate for the rest of 2026, with the final Monetary Policy Committee meeting of the year in November.