By Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole, Koketso Mano & Ame Muller
Our assessment of the residential property market over the first five months of 2026 has centred on resilience. We initially expected the positive sentiment towards South Africa (SA), which supported demand from wealthier households and foreign participants in 2025, to be reinforced by easier financial conditions. This would strengthen demand across both higher- and lower-value segments, supporting firmer mortgage activity and renewed house price growth into 2027. Although the war in the Middle East has added to affordability pressures and may increasingly weigh on transaction volumes, this has so far been offset by continued upward revisions to our house price growth estimates. As these value effects remain evident, we highlight a few trends that support our expectation of continued near-term resilience.
Relocation: more internal than external
The main reasons for selling property have stabilised over the past year, with life-stage downscaling and financial-pressure-related downscaling remaining the most prominent. Sellers have also increasingly looked to upgrade, underscoring the divide between households with financial buffers and those under pressure, while also pointing to opportunities in higher-value segments and coastal markets. At the same time, emigration-related sales have declined sharply, from nearly 20% before the pandemic to 4% currently. Sellers are now more likely to relocate within SA, with this reason accounting for 11% of sales. One emerging theme is a gradual shift from the more expensive Western Cape towards other coastal areas and inland provinces, which should support market fundamentals more broadly, although the balance between value and volume potential will differ by region. However, province-specific risks remain important. In our 2Q26 estate agent survey, satisfaction with market conditions in KwaZulu-Natal fell from 66% to 31%, despite stable activity and shorter time on market. The reasons for selling offer some insight: "moving for safety and security reasons" rose to the fourth most prominent reason, at 10%, from sixth place and 6% in 1Q26. This was the highest rating among the major provinces and above the national average of 7%. The data reinforces the point that, while some provinces may attract demand, service delivery and social challenges could still constrain growth potential.
Skin in the game: not just passive investment
The distinction between value and volume is also useful when assessing whether the market is being driven by rental investors, particularly given stronger foreign participation. The 2Q26 results show that the share of expat buyers remained stable at 2%, while non-resident buyers increased to 7%, from 3% over the past five years and in 1Q26. Buyers from African countries also rose to 18%, from 16% over the past five years and 10% in 1Q26. Even so, the share of buy-to-let buyers declined to 14%, from 20% in 1Q26, bringing it closer to the longer-term average of 11%. Holiday home or retreat purchases remained limited at 2%, with most of these buyers, around 80%, coming from within SA. Overall, more than 85% of purchases are for primary residence or family use. This suggests that people with a direct stake in the country are investing in it for the long term, reinforcing SA's growth potential as structural constraints ease and foreign investment gains momentum.
Conclusion
After a difficult decade and a half, and despite global headwinds in 2026, the residential property market continues to show resilience alongside broader improvements in SA market sentiment. Better structural dynamics support the case for long-term investment, but social and political disruptions remain key risks to confidence. Ultimately, the market's strength lies in the fact that many buyers have a direct and lasting stake in the country, while continued lending innovation should help convert underlying demand into both transaction activity and price value.
Week in review
Headline inflation rose to 4.5% year-on-year (y/y) in May from 4.0% in April. Monthly pressure was 0.7% month-on-month (m/m), mainly due to energy and core inflation. Core inflation lifted to 3.8% y/y, with monthly pressure of 0.2% m/m. Services inflation recorded 0.1% m/m and 4.7% y/y, while core goods inflation was 0.4% m/m and 1.8% y/y. Average fuel prices increased by 14.3% m/m and were 28.7% higher than in May 2025. Food and NAB inflation slowed to 1.9% y/y, from 2.9% previously, and monthly pressure was flat. We predict that headline inflation will lift to 4.7% in June, driven by accelerated transport costs.
Retail sales growth slowed to 1.3% y/y in April, down from 2.5% in March. On a m/m basis, however, sales volumes increased by 0.9%, up from a 0.1% uptick in the previous month. This release provides an early indication of consumer responsiveness to the sharp fuel price increases linked to tensions in the Middle East, and future prints could show further slowdown.
Weekly Round-Up: Economics from Broader Africa
