SARB’s 3% focus sets up a rental-led property upswing

• Shift to 3% anchor cools inflation expectations, boosting planning certainty and supporting a steady, investable rental-growth cycle.
• Elevated borrowing costs keep many buyers renting longer, lifting occupancy, cashflows and yield resilience in key metros.
• Developers and investors pivot to price-right, amenity-rich units; professional management and transparent escalations win tenant loyalty.

Introduction: Inflation shift, rental demand lift

‍The South African Reserve Bank’s move toward a single-point inflation target anchored at 3% is reshaping property psychology.

What began as a perceived constraint on interest-rate flexibility is now stabilising expectations and lowering the inflation outlook. The Bureau for Economic Research’s Q3 Inflation Expectations Survey points to a record-low 4.2% average forecast, with analysts at around 3.6% over five years, signals of a more predictable monetary backdrop.

In practice, that predictability is tilting momentum toward rentals: households stay in the market, but many delay buying until debt costs and affordability improve.

Implications for real estate

• Rental absorption strengthens: With mortgage affordability still stretched, especially in high-growth nodes like Cape Town, more would-be buyers remain in the rental pool, supporting occupancy and escalations.
• Yields and cashflows matter more: Investors prioritise net operating income durability over speculative capital gains. Professionally managed stock with lean operating costs and transparent annual increases becomes prime.
• Product fit beats price alone: Smaller, well-located, amenity-rich units (parking, security, shared workspaces, gyms) see deeper demand, as tenants trade ownership for convenience and cost predictability.
• Developers recalibrate: Pipeline shifts to price-right product and phased releases. Pre-lets, rent-to-own pilots, and institutional leasing partnerships gain traction under a steadier inflation regime.
• Data-led asset management: With inflation expectations anchored lower, owners can plan capex, debt hedging and escalations with greater confidence, improving underwriting and bankability.

Industry view

‍“The SARB’s decision supports longer-term policy clarity, even if it implies higher-for-longer rates in the near term. That clarity lets investors and households plan realistically.”

‍

“Affordability pressure will keep more people renting for longer, which strengthens the professional rental sector supporting predictable escalations and better service levels.” Jonathan Kohler, CEO, Landsdowne Property Group

‍

Conclusion

‍A lower, clearer inflation anchor isn’t a handbrake, it’s a framework for disciplined growth. Buyers may wait longer, but the rental market stands to gain: higher occupancy, steadier cashflows, and more professional management.

For investors and developers, the playbook is simple: bank predictable income, right-size units, and lead with service. In a market trading short-term rate noise for long-term stability, rental-led strategies look set to outperform.

‍