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2026 set to mark peak in House Price Growth
- 2026 house price growth forecast at 6.0% before easing in 2027.
- Further modest rate cuts could support demand in the short term.
- Middle East oil risks pose a potential downside to inflation and rates.
South Africa’s housing market looks set for a stronger year in 2026, but with clear risks on the horizon.
In his first independent economic outlook, former FNB property economist John Loos forecasts that 2026 will represent the short-term peak in house price growth, supported by contained inflation, modest interest rate relief and improving credit demand.
However, rising geopolitical tensions in the Middle East and oil price volatility could alter the trajectory.
Economic Backdrop: Inflation contained, mild growth ahead
South Africa began 2026 with CPI inflation at 3.5% in January, comfortably within the Reserve Bank’s target range.
Loos expects the South African Reserve Bank (SARB) to deliver two further 25 basis point repo rate cuts, one in the second half of 2026 and another early in 2027.
Importantly, the full impact of last year’s rate reductions has not yet filtered through the economy. Combined with a steady global growth outlook, this underpins expectations of mildly stronger economic growth of around 1.6% in 2026, up from an estimated 1.4% in 2025.
The environment is not booming, but it is improving.
Outlook for National House Price Growth
Loos estimates that the StatsSA House Price Index likely averaged growth of approximately 5.4% in 2025.
For 2026, he forecasts average house price growth to reach 6.0%, marking the peak in the current short-term cycle, before slowing to 4.1% in 2027. The logic is straightforward.
After four 25 basis point rate cuts last year, the pace of monetary easing is expected to slow significantly. With only one cut anticipated later in 2026 and possibly one final cut in early 2027, the credit stimulus driving housing demand will begin to fade.
Residential property demand is highly sensitive to interest rate movements. As rate cuts slow, demand growth is likely to taper.
By 2027, house price growth is expected to align more closely with CPI inflation in the 3 - 4% range, reflecting a new equilibrium between supply and demand after a period where demand has exceeded available stock.
Mortgage lending environment remains supportive
The mortgage market currently appears stable and competitive.
According to data from mortgage originator Ooba, loan approval rates remain high, with new loans in early 2026 being priced at roughly 0.65 percentage points below prime on average.
In 2025, growth in the value of new residential mortgage loans approved reached 18.2% year-on-year in the third quarter, according to SARB data, a strong demand-side response to lower rates.
However, given how quickly mortgage demand responds to interest rate shifts, a slowing in rate cuts is likely to see lending growth moderate as 2026 progresses.
Building activity showing tentative recovery
On the supply side, StatsSA building statistics show renewed signs of life off a very low base.
Growth in residential planning approvals and completions has strengthened modestly. While this does not yet signal a construction boom, it suggests supply is beginning to respond to improved demand conditions.
Over time, improved supply dynamics will also help temper price growth.
Middle East flare-up: The key risk
The most significant new risk to the 2026 forecast lies offshore.
Escalating tensions in the Middle East have driven Brent crude oil prices from below $60 per barrel in early January to above $77 at the time of writing.
While far from the $150-per-barrel spike seen in 2008, sustained upward pressure on oil prices would:
- Increase fuel costs
- Raise inflation risk
- Potentially limit SARB rate cuts
- Slow household income growth
Because South Africa follows an inflation-targeting regime, higher oil prices could constrain monetary easing, directly affecting the credit-dependent housing market.
At this stage, the oil shock is not severe. But if it intensifies or becomes prolonged, it presents a clear downside risk to the housing outlook.
The Bottom Line
The base case remains constructive. 2026 is expected to be a stronger year for housing, with price growth peaking around 6% before moderating in 2027 as the rate-cut cycle winds down.
Mortgage conditions remain competitive. Economic growth is improving modestly. Supply is slowly responding.
But the outlook is not without fragility. Oil price volatility and geopolitical risk could disrupt the inflation and interest rate path and housing is always highly sensitive to both.
For investors, homeowners and property practitioners, the message is clear: The cycle still has momentum, but it is approaching its crest.
Click here DOWNLOAD the Full Economic Report
In this episode of Investor Talk with Neale Petersen, newly independent economist John Loos unpacks his first independent Housing Market Outlook, forecasting average house price growth of 6.0% in 2026 before moderating in 2027.
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