Good news for South Africa’s middle-class homebuyers

South Africa’s middle-class homebuyers are making a comeback, with renewed demand in the R1.5 million to R3 million market driven by improving household finances, bond approvals, and economic confidence.

According to Phoenix Bonds National Director, Hannah van Deventer, South Africa’s property market is finally seeing an uptick.

The combination of improving retail activity, vehicle sales, and business confidence is now filtering into buyer behaviour.

“Households are visibly stabilising after the rate hike cycle,” she said. “People are feeling more secure in their jobs, their income, and the broader economy. And we’re seeing that confidence in the property market.”

While Van Deventer made it clear that this is not a boom just yet, she noted that the underlying signals are positive.

“One of the clearest indicators of household stability is consumer spending. When consumers are under pressure, property transactions slow almost immediately,” she said.

“When things stabilise, people start spending more, travelling more, and renewing their focus on long-term investments.”

Various economic indicators are showing signs of improvement in the market. According to Statistics South Africa (Stats SA), retail sales grew 1.6% year-on-year in February 2026, with strong performances across most retail categories.

Holiday card transactions also grew significantly over Easter. According to Standard Bank, customer card spending rose 18.82% year-on-year, while the total number of swiped transactions increased 19.87%.

New vehicle sales rose 13% year-on-year in April 2026 to 47,979 units, which Naamsa verified as the strongest April performance in 13 years.

Business confidence is also generally improving. Global energy shocks caused a national dip to 39 points in the second quarter of 2026, according to the RMB/BER Business Confidence Index.

However, this follows a near five-year peak of 47 points in the first quarter, and the trajectory remains above previous historic lows.

“These aren’t isolated numbers,” van Deventer said. “They’re telling us that households are coping better, spending more confidently, and planning ahead again. And that always feeds into the property market.”

The R1.5 million to R3 million band surprise

While the affordable segment (R750,000 to R1.5 million) remains the most active nationally, Van Deventer said the real surprise in 2026 is the mid-market.

“The R1.5 million to R3 million price band, which is usually the most sensitive to interest rate pressure, is actually showing the strongest signs of renewed buyer activity across the major metros,” she said.

This segment was hit hardest during the hiking cycle, since these buyers typically have larger monthly repayments, more exposure to debt, and are therefore more sensitive to rate shocks.

As such, Van Deventer said their return is a positive indicator that middle-class households are regaining confidence.

“The mid-market is moving again. When activity picks up in the R1.5 million to R3 million range, it tells you that buyers are feeling more secure about their jobs, their income, and the broader economy,” she said.

Phoenix Bonds’ group data shows that bond application volumes in the mid-market have not only stabilised but are beginning to improve.

Bond approval rates have also strengthened modestly. This indicates that buyer affordability is on the rise. Deposit requirements have also eased slightly, suggesting that lenders are competing for quality buyers.

Meanwhile, time on the market has reduced, particularly in Gauteng metros, Cape Town, and the KwaZulu-Natal North Coast.

Phoenix Bonds also revealed that first-time buyers are active. This group now accounts for about half of all bond applications.

Transfer volumes are no longer declining, and there are early signs of year-on-year improvement in 2026.

Rental escalations are also positive, and vacancy rates are at multi-year lows: “a classic precursor to increased buying activity”.

They also found that building plans passed have shown year-on-year improvement, particularly for additions and alterations.

“These are the trends you see when households start planning again,” Van Deventer said. “People renovate when they believe in their future. They buy when they feel secure. They move when they feel ready.”

Risks remain

Unfortunately, Van Deventer cautioned that this recovery is not without its tensions. Consumer inflation, in particular, remains a concern.

According to Stats SA, CPI inflation climbed to 4.0% in April 2026, up from 3.1% in March on the back of rising global energy costs and fuel price increases. She said this will keep pressure on the South African Reserve Bank (SARB).

“Inflation is a concern, and the SARB will be watching it closely. But the bigger economic picture is a lot more balanced than some of the headlines suggest,” she said.

“The resilience in consumer spending, vehicle sales, and business confidence isn’t a sign of a fragile economy. And the property market is responding to many signals, not just the latest inflation stats.”

For prospective homebuyers, Van Deventer said this is a window of opportunity, especially where affordability is concerned. “Regardless of rate announcements and inflation numbers, it’s important to look at the full picture,” she said.

“The property market doesn’t move on a single headline. It moves on the underlying health of households, which are showing great resilience.”