Good news for South Africa’s property market

South Africa’s property market is set for a stronger 2026, with lower interest rates, a stable rand, and rising home-loan activity driving recovery.

Seeff Property Group chairman Samuel Seeff told Daily Investor that he is positive about the overall outlook for South Africa’s property market in 2026.

He explained that the market will continue to see the recovery cycle moving ahead, supported by lower interest rates, a stronger rand, and increased home-loan application volumes.

“That said, it remains a tale of two markets, with the Cape excelling and favouring sellers; elsewhere, it remains a buyer’s market,” he said.

Inland areas, particularly the economic heartland of Gauteng, are still in recovery. There has been an increase in demand and a corresponding rise in sales, accompanied by a depletion of stock levels.

However, the inland markets remain favourable for buyers in Gauteng and other areas. On the other hand, in the Cape, there are now stock shortages and excellent opportunities for sellers to achieve a good price.

Due to the constrained sales volumes inland, he said that even though the Cape is seeing new developments, there is not much being built elsewhere.

Seeff explained that in 2026, semigration is set to continue to the Cape and coastal areas, as well as surrounding areas such as the winelands, driven largely by lifestyle needs.

Lifestyle migration from Cape Town to the winelands, coastal and country hotspots will continue for those who can afford to do so.

This includes Cape Town and surrounding areas such as Paarl, Stellenbosch, smaller towns of the Overberg, and the Garden Route towns such as George, but also retirees to areas such as Hermanus, Knysna, Plettenberg Bay.

The general migration to urban centres, such as Johannesburg and Pretoria, will also continue as people seek economic opportunities in cities and larger towns.

Seeff added that 2026 will also see continued migration to security estates and complexes as people seek a secure lifestyle, but also better services, which are often available in estates.

Interest rates

Seeff explained that there has been strong activity in the luxury sector, primarily in Cape Town and other prime Cape coastal areas, with more high-value sales and higher prices paid.

“The Gauteng upper end remains constrained above R15 million, while Cape Town has been particularly active above this price band. This may well remain the case until the economy and sentiment improve,” he said.

The mid- to low-price sector remains rate-sensitive to interest rate shifts and economic constraints, particularly for first-time buyers.

However, he noted that the interest rate cuts have brought vital relief and higher demand for property in this sector.

This sector accounts for the largest volume of transactions in the market, and further rate cuts are necessary to adequately stimulate this sector of the market, particularly in inland areas.

Notably, Seeff also stated that he continues to view the economic fundamentals as favourable for further interest rate cuts in 2026.

“The currency has remained stable while inflation, despite marginal upticks, remains contained at a historic low,” he said.

“This provides ample room for the Reserve Bank to consider at least two more rate cuts in the first half of 2026, starting with a rate cut at the end of January.”

When it comes to price growth, Seeff said the Cape leads by a notable margin. “This is likely to remain the case with other areas likely to see low growth until sales volumes increase more meaningfully.”

Furthermore, the Cape is seeing stock shortages due to the high demand, and sellers are consequently achieving excellent prices. “Gauteng and other inland areas still have adequate stock levels, although there are always exceptions,” he said.

Challenges and opportunities

Seeff said he expects the rental market to continue its strong performance in 2026, with positive rental growth and stock shortage driving demand for more rental investments.

“More affordable rentals seem to be in low supply, especially in high-demand areas such as Cape Town, and present good opportunities for investors and developers,” he said.

Affordability also remains a challenge for first-time buyers, given that the interest rate is still higher than what Seeff believes it should be to stimulate real growth in first-time buying.

However, he noted that the rate cuts since mid-2024 have brought relief and boosted more first-time buying, but the overall levels remain below what they should be.

This is also tied to rising prices in high-demand areas, such as Cape Town, where entry-level prices are significantly higher than those in Gauteng.

“The challenge is that price growth in the Cape exceeds economic growth and income growth, which has not kept pace with the market. There is an opportunity in this for developers to provide products for the first-time buyers market,” he said.

While Seeff said he feels more positive about the economic outlook of South Africa’s property market in 2026, challenges remain.

“We continue to operate in uncertain times with geopolitical concerns around US/SA trade relations, which may impact the economy, and interest rates,” he said.

“Based on current conditions, we feel positive that we should not have to face interest rate hikes, but could rather look forward to further rate cuts given the positive fundamentals, including the stable currency and low inflation rate.”