Flat Forecasts ahead: SA House Price Growth stuck in low gear through 2025

Top 3 Highlights

• House price inflation is likely to end 2025 at 2.5%, with a high-road cap of just 3.5% according to Lightstone.
• Economic uncertainty, stable interest rates, and weak investment continue to dampen housing market momentum.
• Mid and High Value segments may gain slightly, while Luxury and Freehold properties face muted growth.

House price inflation (HPI) could reach 3.5% in Lightstone’s high road scenario for 2025 but would more likely end the year around 2.5%, with the mid-road scenario a more probably outcome.

Lightstone is not forecasting a turnaround in the residential property market – even the high road scenario is relatively modest – and the low road scenario assumes a continuation of conditions characterised by uncertainty and unpredictability.

It does not consider major disruptions from internal events, like the collapse of GNU, or global issues, like the USA's tariff campaign, a global recession or worsening geo-political conflict.

High, mid and low HPI scenarios for 2025

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The mid road scenario is built around polling data from the SA Reserve Bank on expected movements in GDP, CPI and the Repo rate. GDP is expected to grow at around 2.4%, CPI to slowly increase from 3.3% in Q1 to 5% in Q4 and interest rates to remain stable throughout the year. 

The high road scenario predicts more favourable foreign investment, with a projected GDP growth of 3% and a potential decrease in CPI to 2.75%. This situation may lead the SA Reserve Bank to lower interest rates, likely resulting in a 25 basis point cut later in the year. In this scenario, the High and Mid-value market segments, which show an upward HPI trend, are expected to benefit the most, potentially ending the year at around 3.5%. Sectional Title properties, which started the year on an upward path, would also be supported in this scenario.

The low road scenario expects that South Africa's limited economic growth, paired with reduced foreign investment, will result in a 2% decrease in GDP. CPI inflation is projected to rise to 5.5%, possibly prompting the SA Reserve Bank to increase interest rates by 25 basis points to manage inflation. This scenario suggests a subdued market, with HPI for all residential segments likely falling to approximately 1.5% or lower.

Lightstone’s price bands

Low Value = <R500k

Mid Value = R500k – R1m

High Value = R1m – R2m

Luxury Value = >R2m

Prospects for residential categories

While the HPI for Sectional Title properties grew steadily in 2024 while it moved sideways for Freehold properties, projections for 2025 are similar, with highs of around 3.5% and lows of around 1.5%.

Freehold

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Sectional Title

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Price band forecasts

HPI for High Value properties and Mid Value properties could reach 3.5% if the high road scenario emerges, but will more likely sit at around 2.5%, or could drop to just above 1.5% for the High Value properties and just below 1.5% for the Mid Value properties, if conditions worsen and the low road scenario happens.

High Value

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Mid Value

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The growth in the HPI within the Luxury band is anticipated to be moderate. Projections indicate a potential increase of 2.5% under favourable circumstances, while the low road scenario may result in a growth rate of approximately 1%.

Luxury