Dr Andrew Golding, chief executive of the Pam Golding Property group, comments that with inflation edging slightly higher to 3.6% in December 2025 from 3.5% in November, the Monetary Policy Committee adopted a cautious stance. This was despite the fuel price relief expected in February 2026 following a significant fuel price reduction in January. The committee therefore kept the unchanged repo rate at 6.75%.
While the decision was not what existing mortgage holders and prospective homebuyers seeking credit were hoping for, most market commentators believe there is scope for up to two 25bps repo rate cuts during 2026. This view is supported by inflation remaining contained. The outlook for interest rates is also underpinned by ongoing rand resilience. Easing inflation expectations and softer global oil prices further support this outlook.
Positively, demand for housing remains steady. Stock shortages persist in high-demand areas. Signs of recovery are evident across markets and regions, including Gauteng. Furthermore, according to ooba Home Loans, demand for investment and buy-to-rent properties is already surging. Recent interest rate reductions have supported this trend. Growing optimism around the scope for further cuts this year has also contributed. Improved prospects for stronger economic growth have supported a clear rebound in investor demand.
All factors considered, the year ahead is expected to offer sound prospects for both buyers and sellers. As interest rates gradually ease and filter through the housing market, affordability should improve. Competitive lending conditions are also likely to sustain buyer appetite. At the same time, rising GDP and improved revenue collections underpin a stable and encouraging macroeconomic environment.
Although the luxury market is expected to continue experiencing steady demand, activity across major metros is likely to be concentrated in more affordable price bands. Value-driven suburbs are expected to see increased interest. Lower interest rates are supporting increased participation by first-time buyers. Cape Town is set to remain the strongest metro overall. However, sustained price growth and limited stock available for sale are likely to redirect interest toward surrounding small towns. This is particularly evident in coastal and lifestyle destinations.
Pam Golding Residential Property Index Highlights
Encouragingly for homeowners, according to the Pam Golding Residential Property Index, national house price inflation remained steady at +3.1% in December 2025. This lifted the average to +2.9% for 2025 as a whole. This represents the strongest growth in nominal house prices since 2022. That period coincided with the post-Covid housing market boom.
Revised data reveals that the R2 million to R3 million price band recorded the strongest growth in prices during the final quarter of 2025. However, house prices in the upper price band, valued at over R3 million, registered the strongest growth on average over the past year. This growth measured 4.5%.
Average HPI figures show that properties priced below R1 million recorded growth of +0.98% in 2024 and +1.8% in 2025. The R1 million to R2 million band recorded +1.7% in 2024 and +3.2% in 2025. Properties priced between R2 million and R3 million recorded +2.6% in 2024 and +4.3% in 2025. Properties priced above R3 million recorded +4.7% in 2024 and +4.5% in 2025. The overall average rose from +2.0% in 2024 to +2.9% in 2025.
| Average HPI | 2024 | 2025 |
|---|---|---|
| < R1m | +0.98% | +1.8% |
| R1m – R2m | +1.7% | +3.2% |
| R2m – R3m | +2.6% | +4.3% |
| > R3m | +4.7% | +4.5% |
| Average | +2.0% | +2.9% |
Source: Pam Golding Residential Property Index
Gauteng Market Gathers Momentum
Notably, while the Western Cape continues to significantly outperform the two other major regional markets, only Gauteng continues to see growth in house prices gather momentum. Gauteng began to outperform KwaZulu-Natal in recent months. Last year, Western Cape house price inflation averaged 7.4%. This compares with 2% in KwaZulu-Natal and 1.9% in Gauteng.
Source: Pam Golding Residential Property Index
In the major metros, Cape Town continues to outperform. Johannesburg has once again edged ahead of eThekwini. Tshwane’s house price inflation continues to outperform both Johannesburg and Ekurhuleni.
Source: Lightstone
During 2025, Cape Town house price inflation outperformed other metro markets by a considerable margin. It averaged +7.5%. Tshwane followed in second place at +2.6%. Ekurhuleni trailed marginally behind Johannesburg, recording +1.5% compared with Johannesburg’s +1.7%.
Source: Lightstone
Despite losing momentum during the second half of last year, coastal house price inflation continues to outpace non-coastal areas. During 2025 as a whole, coastal house price inflation averaged +4.7%. Non-coastal areas averaged +2.9%.
Source: Lightstone
Meanwhile, freehold house price inflation continues to outperform growth in sectional title properties. During 2025, freehold house price inflation averaged +3.9%. Sectional title properties recorded average growth of 2.65%.
Source: Lightstone
All comments above by Dr Andrew Golding, chief executive of the Pam Golding Property group
Issued by Gaye de Villiers
M: 083 325 1939
On behalf of Pam Golding Properties
Caption: Dr Andrew Golding, chief executive of the Pam Golding Property group
