By By Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole, Koketso Mano & Ame Muller
The latest General Household Survey (GHS) points to structural shifts in South Africa's (SA) housing tenure, with demand increasingly tilting toward rental rather than ownership. This reflects the interaction of robust household formation, weaker affordability, and more constrained mortgage access, alongside persistent urbanisation. However, there is likely continued divergence between those who can afford to and prefer to own property, and households with financial constraints. To focus on underlying trends, the analysis compares 2019 with 2025, thereby avoiding distortions associated with the 2020 Covid-19 disruption. This note explores the implications of these trends for property markets.
Population dynamics: Strong household formation and deepening urban concentration
Between 2019 and 2025, household formation remained strong, rising by 17.2% (from 17.2 million to 20.1 million) and outpacing population growth of 9.7%. This implies a continued decline in the average household size, increasing the number of housing units required per capita, and representing a structural uplift in underlying housing demand, despite a weak macroeconomic backdrop. Provincially, Gauteng leads, with its household base expanding by 22.1%. KwaZulu-Natal and the Western Cape also recorded above-average growth (16.7% each), reinforcing the concentration of population and economic activity in key urban areas (Figure 1).
At the metro level, this concentration has intensified. Gauteng metros remain the primary drivers of growth, outpacing smaller urban centres and reinforcing the dominance of large nodes (Figure 2). This reflects the continued pull of labour market opportunities and access to services, suggesting urbanisation remains structurally embedded despite pandemic disruptions. The post-2021 recovery has largely reinstated pre-existing migration patterns, with implications for both housing demand and commercial activity.
Housing tenure: Constrained entry into ownership?
The most significant change is in housing tenure. The share of renting households increased from 21.9% in 2019 to 25.8% in 2025, equivalent to roughly 1.4 million additional renter households. This marks a clear re-weighting of the housing market toward rental demand. Mortgage-linked ownership declined modestly from 7.5% to 6.3%, while fully-paid ownership also fell in share terms, from 57% to 53% (Figure 3).
These shifts reflect more than cyclical dynamics. While ultra-low interest rates between 2020 and 2021 initially supported ownership, particularly among younger buyers, the subsequent tightening in financial conditions imposed a material constraint. Higher borrowing costs and weak real income growth reduced affordability, while tighter credit conditions limited mortgage access. As a result, the transition from renting to ownership weakened, with rental demand reflecting both reduced entry into ownership and some fallback from ownership, reinforcing a more persistent shift in tenure dynamics. Supporting this, Deeds data shows that, outside the brief 2020-2021 period, the <35-year-old age group has experienced a structural decline in ownership levels (Figure 4). However, female ownership levels continue to trend upward, pointing to a gradual shift in the composition of homeowners. In addition, our Estate Agents survey has consistently shown that once households transition to ownership, they are more likely to transition within the ownership market (e.g. trading across price segments), rather than reverting to rental. Together, this suggests that the tenure shift is being driven primarily by weaker entry into ownership, rather than significant exit from ownership.
Implications for the property markets
Overall, the housing market is becoming increasingly rental-led, particularly in metros, driven by demographic and affordability dynamics. Strong household formation combined with affordability pressures is reinforcing demand for build-to-rent, sectional title rentals, and affordable multifamily housing. Weaker mortgage-backed ownership suggests that unlocking the entry-level segment will require more innovative financing structures and sustainably easier credit conditions.
For commercial property, rising metro concentration reinforces the centrality of Gauteng, Cape Town, and Durban as the core nodes of economic activity and demand. This supports demand for retail, office, and especially logistics, driven by urban consumption and e-commerce. By contrast, smaller provinces are likely to face weaker demand, higher vacancy risk, and constrained rental growth.
Week in review
The manufacturing PMI fell by 1.8 points to 50.8 in May, from 52.6 in April, but remained above the 50-points neutral mark for a second consecutive month. The business activity index declined sharply to 43.5 from 52.8, reflecting weaker demand, with new sales orders also falling back to first-quarter levels as tailwinds faded. Export sales improved marginally but remained in contraction, while the employment index rose to 48.4 from 43.8 - still reflecting weak labour market conditions. The supplier deliveries index stayed elevated for a second month, indicating slower deliveries amid global shipping disruptions and local logistical constraints. Inventories increased to 55.8, driven by precautionary stockpiling rather than stronger demand expectations. Although the purchasing price index eased slightly, cost pressures remained elevated, with firms citing broad-based increases beyond fuel. Encouragingly, the expected business conditions index rose from 47.4 to 52.9, pointing to improved sentiment, though concerns about weak demand persist.
New vehicle sales remained steady at 12.8% year-on-year (y/y) in May, reaching 51 071 units, up slightly from 47 892 units in April. The increase was largely driven by passenger car sales, which accelerated to 16.3% y/y (from 13.7%), reaching 36 871 units. In contrast, commercial vehicle sales slowed to 4.5% y/y (from 10.5%), with total sales of 14 200 units. Within this segment, medium and extra-heavy vehicles recorded relatively strong growth, while light and heavy commercial vehicle sales growth moderated. Bus sales declined by 16.2% y/y. Overall, the sustained annual growth in vehicle sales continues to reflect resilient demand, particularly for entry-level and more affordable brands, although the recent monetary policy hike may begin to weigh on affordability and temper demand going forward.
The RMB/BER Business Confidence Index (BCI) fell to 39 index points in 2Q26, down from 47 in the previous quarter. Business confidence weakened notably, reversing earlier gains and indicating a broad-based loss of momentum across sectors and regions. Most sectors reported lower confidence, particularly wholesale trade and new vehicle dealers, while only manufacturing showed marginal improvement. The composite indicators point to a clear deterioration in the business environment. Both realised and expected business conditions turned more negative, signalling a worsening outlook and weaker activity levels. Employment conditions softened further, while price pressures intensified notably, with significant increases in both purchasing and selling prices. Overall, indicators suggest that the economy has moved deeper into a downturn phase, with declining confidence, weaker activity, and rising cost pressures dampening the outlook.
Electricity production declined by 9.0% y/y in April, following a 6.9% decline in March. On a seasonally-adjusted basis, generation declined by 1.7% month-on-month (m/m), after a 1.4% m/m decline in December. Looking at the broader trend, electricity generation declined by 1.8% in the three months ending April, compared with the prior three-month period.
South Africa's gross foreign exchange reserves declined slightly to $76.6 billion in May, from $77.1 billion in April. The decrease was mainly driven by a lower United States dollar valuation of gold holdings, alongside government-related foreign exchange flows. Both gold and foreign currency reserves edged lower. Meanwhile, the forward position eased marginally to $0.584 billion (from $0.586 billion), and Special Drawing Rights (SDR) holdings fell to $6.6 billion from $6.7 billion.
Week ahead
On Tuesday, Real Gross Domestic Product (GDP) data for 1Q26 will be released. In the previous quarter, real GDP expanded by 0.4% quarter-on-quarter (q/q, seasonally adjusted), following 0.3% q/q growth in 3Q25. On an annual basis, growth moderated to 0.8% y/y, down from 2.1% y/y in 3Q25, largely reflecting a sharp reversal in agricultural growth to -12.8% from a 62.9% surge in 3Q25. We expect quarterly GDP growth of around 0.2% in 1Q26, underpinned by the trade, transport, and mining sectors. Meanwhile, the manufacturing sector's drag on GDP growth carried into 1Q26. We have pencilled in modest quarterly growth for the notoriously volatile agricultural sector, reflecting increased crop production, while the Foot and Mouth Disease (FMD) outbreak might have affected animal production.
On Wednesday, the FNB/BER Building Confidence Index for 2Q26 will be available. The index edged down to 42 index points in 1Q26, from 43 in the previous quarter, largely reflecting sharp declines in sentiment among building material manufacturers and hardware retailers. Encouragingly, activity and profitability improved across much of the sector, indicating that the recovery in building conditions is continuing, albeit at a constrained pace.
On Thursday, we will get current account data for 1Q26. In the previous quarter, SA's current account rebounded to a surplus of R50.2 billion from a deficit of R72.0 billion in 3Q25. As a share of GDP, the current account switched to a surplus of 0.6% in 4Q25 versus -0.9% previously. On an annual basis, the current account deficit narrowed to R35.2 billion (0.5% of GDP) in 2025. The improvement was driven by a widened trade surplus and improved terms of trade.
Also on Thursday, mining production data for April will be released. Mining production (not seasonally adjusted) expanded by 2.5% y/y in March, slowing from a 9.7% increase in February. On a seasonally-adjusted basis, mining output declined sharply by 5.1% m/m, reversing the 3.0% increase recorded in February. The largest positive contributors to the monthly annual increase were platinum group metals, gold, and manganese ore, while coal was the main detractor. Overall, mining output increased by 0.6% q/q, suggesting that the sector made a positive contribution to GDP growth in the first quarter of 2026.
Lastly on Thursday, manufacturing production data for April will be released. Manufacturing output (not seasonally adjusted) increased slightly by 0.9% y/y in March, reflecting a rebound from a 2.3% contraction in February. On a seasonally-adjusted basis, output improved by 0.8% m/m, partially rebounding from a 1.8% monthly decline in February. However, this was insufficient to translate into positive quarterly growth and, as such, output declined by 1.0% q/q in 1Q26, suggesting that the manufacturing sector weighed on GDP growth. We expect the sector to remain under pressure in the near term amid the ongoing Middle East turmoil that has resulted in higher energy-related production and freight transport costs.
Weekly Round-Up: Economics from Broader Africa
