Economic rebound sparks fresh momentum in SA’s housing market

• Lower interest rates and rising employment are restoring household buying power.
• Record vehicle sales and GDP growth signal a broad-based consumer recovery.
• Strong fundamentals, not speculation, are now driving property demand.

The lie of land

After two years of rising interest rates, squeezed household budgets and cautious lending, South Africa’s housing market is finally seeing a meaningful shift in momentum. A broad-based economic rebound, supported by lower borrowing costs, improving consumer confidence and strengthening growth indicators, is translating into renewed activity across residential property.

According to BetterBond, the country’s largest bond originator, the recovery is no longer driven by sentiment alone, but by improving fundamentals: job creation, easing inflation, stronger household balance sheets and renewed credit appetite.

The Interest Rate Turning Point

“Undoubtedly, the most encouraging news for homeowners at the end of last year was the Reserve Bank’s decision in November to cut the prime lending rate by a further 25 basis points, making it 150 basis points lower than it was in September 2024,” says Bradd Bendall, National Head of Sales at BetterBond.

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He adds that a firmer rand, trading at levels last seen in 2022, and moderating inflation have created a far more supportive environment for both first-time buyers and existing homeowners looking to upgrade or refinance.

Lower rates are already feeding through to affordability, improving approval rates and stimulating buyer confidence after an extended period of financial strain.

Consumer confidence Is rebuilding

Household resilience is strengthening as debt-servicing pressure eases. The Altron FinTech Household Resilience Index shows a clear inverse relationship between interest rates and financial health.

After sharp deterioration during the 2022 - 2023 hiking cycle, the index recorded a 2.3% year-on-year improvement by the second quarter of 2025, supported by multiple rate cuts and falling fuel prices.

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“This recovery in household resilience is critical,” says Bendall. “It restores discretionary spending, improves credit behaviour and ultimately translates into stronger home loan demand.”

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BetterBond’s own data confirms this shift, with home loan applications up 16% year-on-year and volumes now 23.5% higher than their late-2023 lows.

Record vehicle sales signal broader recovery

The rebound is not limited to property. New vehicle sales surged 16.8% year-on-year to a record 56,000 units, while vehicle and component exports reached all-time highs in the third quarter of 2025. These trends point to renewed consumer confidence, healthier credit conditions and stronger economic momentum across multiple sectors.

When households are willing to commit to big-ticket purchases, it is usually an early signal of improving financial security and future income expectations, a positive leading indicator for residential property demand.

Strong GDP growth and job creation

South Africa’s real GDP expanded by 2.1% year-on-year in the third quarter of 2025, the strongest performance in three years.
Importantly, this growth is being accompanied by employment gains, with Statistics SA reporting the creation of approximately 250,000 new jobs, 65% of them in the private sector.

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“Growth that creates jobs is exactly what the housing market needs,” Bendall notes. “It supports sustainable demand rather than speculative spikes.”

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Commodities and investor confidence add support

Rising commodity prices are further strengthening the macro backdrop. Gold and platinum reached multi-year highs in late 2025, boosting export earnings, fiscal revenue and employment in key regions. At the same time, South Africa’s removal from the FATF grey list and its sovereign credit rating upgrade by S&P have improved investor confidence and reduced perceived country risk.

Together, these developments are reinforcing currency stability, lowering risk premiums and supporting capital inflows – all of which filter through to the property market via cheaper funding and improved confidence.

Fundamentals are now driving the housing cycle

“Taken together, these indicators show an economy that is not just recovering, but regaining structural resilience,” says Bendall. “As employment improves, balance sheets strengthen and confidence returns, housing demand is increasingly being driven by economic fundamentals rather than short-term sentiment.”

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Construction activity is also responding, with approved building plans and completions rising, signalling renewed developer confidence and future housing supply.

Way forward

South Africa’s housing market is entering 2026 on a far stronger footing than it has enjoyed in several years. Lower interest rates, improving consumer confidence, record vehicle sales, firm GDP growth and supportive commodity dynamics are aligning to restore affordability and unlock pent-up demand.

What sets this recovery apart is its quality. Rather than being fuelled by temporary stimulus or speculative exuberance, it is anchored in improving employment, easing inflation, stronger household finances and stabilising credit conditions.

For homeowners, buyers and investors alike, the message is clear: the current upswing is being built on real economic foundations – giving the residential property market a more sustainable platform for growth in the year ahead.

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