House prices rose for a fourth straight month in August and at the fastest annual pace since May 2022, indicating a recovery in the sector could be gaining momentum, according to the FNB property barometer.
The FNB house price index gained 4.5%, while the July figure was revised up to 4.4% from 3.7%, indicating sustained upward momentum in residential property values, despite relatively high interest rates.
FNB noted that while the Reserve Bank cut its repo rate to 7.25% in May, the benchmark is still 275 basis points above the level during the last comparable period of strong home prices, according to the FNB property barometer.
“Western Cape continues to register the strongest house price inflation, supported by firm demand. However, Gauteng and KwaZulu-Natal are showing signs of recovery after a period of stagnation earlier this year,” FNB senior economist Siphamandla Mkhwanazi said.
“Price growth in both provinces has begun to accelerate, although from a low base, narrowing the gap with the Western Cape and suggesting a broader regional rebound.”
Data from the Reserve Bank shows that the recovery in prices is not being driven by an increase in mortgage lending. Outstanding mortgage balances rose just 2% year on year in July, and have been confined to a tight range in recent months. That reflects continued credit prudence, either from banks or from consumers wary of higher borrowing costs, FNB said.
While affordability remains tight ... steady rates offer a degree of predictability that buyers and developers can work with.
— Jonathan Kohler, Landsdowne Property Group CEO
Mkhwanazi said continued growth would probably depend on the interest rate trajectory. Should borrowing costs stabilise or decline, affordability could improve, potentially encouraging more buyers to enter the market with financing support. An increase in mortgage lending would add further support to house prices.
Still the housing price recovery at present appears to be underpinned more by demand-side resilience than by credit expansion.
Landsdowne Property Group CEO Jonathan Kohler said the residential property market is entering a phase of cautious optimism, given the 25 basis point cut in interest rates.
“While affordability remains tight — particularly in metros like Cape Town and Johannesburg — steady rates offer a degree of predictability that buyers and developers can work with,” Kohler said.
Sectional title properties are expected to continue leading the market, especially among first-time buyers and young professionals seeking secure, low-maintenance living, he said.
“A steady rate environment helps sustain this momentum by allowing home buyers and investors to lock in financing without fear of sudden hikes,” Kohler said.
However, lending remains stringent and buyers are increasingly opting for smaller units in well-located suburbs such as Claremont (Cape Town), Centurion (Gauteng), Bryanston (Gauteng) and Durban North, he said.
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