South Africa’s Top 5 residential investment trends for 2026

• Rates cuts, a stronger rand and stabilising inflation are resetting investor confidence for 2026.
• Semigration, rentvesting and sectional title demand are reshaping residential buying patterns.
• Foreign capital and tighter short-term rental rules will influence pricing and yields.

South Africa’s Residential Market: Setting the stage for 2026

‍After a bruising 2024 marked by affordability pressure, muted transaction volumes and stubbornly high borrowing costs, the residential market surprised on the upside in 2025. Buyers returned as long-awaited rate cuts kicked in, and sentiment improved materially.

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“We end 2025 with the prime lending rate a full percentage point lower than January, now at 10.25%,” says Grant Smee, CEO of Only Realty Property Group. “With economists expecting two further 25-basis-point cuts by mid-2026, the outlook is looking bright for would be property investors.”

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Despite geopolitical tensions and tariff-related shocks, the rand clawed back 13% over the year, supported by a revised lower inflation target and improving consumer confidence.

With macro conditions turning a corner, Smee outlines the five residential trends set to dominate in 2026.

1. House Price Inflation to Stabilise not surge

HPI outpaced consumer inflation in 2025, marking the first real-value appreciation since the pandemic. But investors should expect moderation, not a repeat boom.

Smee believes 2026 will reflect a post-rate-cut “normalisation phase”.

• Growth remains positive, but more modest.
• Lower HPI reduces barriers to entry, especially for first-time buyers.
• Coastal low-to-mid price bands will still show strong appreciation fuelled by semigration.

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“High expectations must be tempered,” he warns. “2025’s rebound was exceptional. 2026 will be healthier, more balanced and more accessible.”

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2. Gen Z Rentvesting goes mainstream

With the oldest Gen Zs turning 29 in 2026, this generation is moving into their wealth-building years, but affordability gaps remain a hurdle.

While the average first-time buyer is 36 (ooba), many Gen Zs are choosing rentvesting: buying an investment property in an affordable node while renting a lifestyle-driven home elsewhere.

Social media is fuelling this trend.

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“Fin-fluencers on TikTok have made rentvesting aspirational — but also deceptively simple,” says Smee. “It can work brilliantly if you avoid the debt trap. Overextending to maintain a certain image is a costly mistake.”

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Expect this trend to surge in 2026 as Gen Zs chase passive income and lifestyle flexibility.

3. Return to office shift accelerates Sectional Title demand

Remote work is losing ground as more corporates call employees back to the office. Semigrants and hybrid workers are now gravitating to lock-up-and-go urban units.

Key drivers:

• Sectional title equity growth outpaced freestanding homes in 2025 (FNB Property Barometer).
• Buyers are prioritising proximity over space, closer to offices, schools and transport.
• Off-plan sectional title developments remain more affordable.

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“The lock-up-and-go lifestyle is delivering strong demand and strong returns,” says Smee. “Expect sectional title to outperform again in 2026.”

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4. Foreign buyers set sights on Gauteng

Foreign buyers invested heavily in 2025, spending an average of R2.7 million per property, significantly higher than locals.

While the Western Cape still attracts the lion’s share, Gauteng is gearing up for a comeback:

• Johannesburg’s impressive G20 Summit visibility boosted international confidence.
• Service-delivery improvements and infrastructure upgrades are reshaping perceptions.
• Gauteng historically records the highest foreign buyer volumes.

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“With renewed global attention and its role as the country’s economic engine, Gauteng is well positioned for a resurgence in foreign investment,” says Smee.

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‍5. Tougher short term rental regulations on the horizon

‍Short-term letting has squeezed rental supply in hotspots like Cape Town, where around 70% of inner-city units are hotel-managed or on Airbnb.

As landlords chase higher yields from tourists and digital nomads, long-term rental stock continues to shrink — pushing locals out of once-affordable neighbourhoods.

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Smee expects mounting pressure for regulation in 2026.
“Cape Town must avoid the mistakes of over touristed cities like Barcelona. Expect debate around capping rental days, tightening zoning and restricting short-term conversions.”

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2026 an opportunity

Smee believes 2026 will be dynamic even unpredictable, but largely positive.

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“With rates easing, the rand strengthening and clear demand drivers emerging, investors who stay awake, informed and adaptable will uncover serious opportunities across every price band in South Africa’s residential market.”

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The message is simple: 2026 belongs to investors who move early and move smart.

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