South Africa’s residential property market is showing more staying power than many expected. The latest BetterBond Property Brief for August 2026 reports that first-time buyers reached a record average purchase price of just above R1.4 million in July, even as lenders lifted deposit requirements back toward levels last seen in early 2024.
The backdrop is a stable interest-rate environment. At its July 2026 meeting, the South African Reserve Bank’s Monetary Policy Committee (MPC) left the repo rate unchanged at 7%, keeping the prime lending rate at 10.5%. The decision was not unanimous: four members favoured a hold, while two preferred a 25-basis-point hike. Governor Lesetja Kganyago said the committee views the current policy stance as “somewhat restrictive” and appropriate for now, with the bank’s model pointing to possible cuts later as inflation returns toward target.
For home buyers, that stability matters. A year of rate cuts from late 2024 into early 2026 already brought the prime rate down from 11.75% in September 2024 to the current 10.5%. That relief, combined with rising homebuyer incomes, has improved affordability. Over the past two years, average homebuyer incomes climbed roughly 14%, and the ratio of deposits to average annual salaries has fallen 21% since peaking in the fourth quarter of 2022.
The numbers reflect the effect. Home loan applications dipped only 1.5% in July compared with July 2024, and were marginally higher than the average of the preceding three months. More importantly, loans granted rose 4.1% year-on-year and 28% since July 2024. Average home values held steady at about R1.7 million for all buyers, while first-time buyers set a new record.
Banks are not loosening the purse strings entirely. Average deposits moved higher in July, with first-time buyers needing around 13.2% of the purchase price. That is still below the peaks seen during the 2022–2024 hiking cycle, but it shows lenders are managing risk carefully ahead of the next MPC decision.
Inflation remains the wild card. Headline CPI jumped to 5% in June, driven largely by fuel prices, but food inflation has continued to ease, reaching 1.4%. The SARB has flagged upside risks from oil-price volatility and services inflation, and some analysts expect a possible 25-basis-point hike in September if second-round inflation pressures persist. Our preview of the September decision sets out what such a move could mean per R1 million of bond.
For now, the market is benefiting from a rare combination: stable rates, stronger household incomes, and contained food inflation. That is supporting demand among first-time buyers and repeat buyers alike.
What to watch next
- The September 2026 MPC decision, where the SARB will weigh oil-driven inflation against slower food-price growth.
- Whether banks keep raising deposit requirements or ease them if rates stay on hold.
- Building-plan approvals and new-building loan volumes, which have been soft and could point to a future supply shortfall.