FNB Residential Property Report – House price growth forecast to near 3% by 2026

FNB Senior Economist Siphamandla Mkhwanazi once again offers insight with an analysis of the latest FNB Property Market Report 13 May 2025. FNB currently projects house price growth to approach the 3% mark by 2026. Here we present the summary, plus you can access the full PDF.

Here’s a summary of the FNB Residential Property Report:

Market overview and current trends

• The latest FNB House Price Index (HPI) reveals a continued, albeit modest, upward trajectory in home values, averaging 2.2% y/y in April, up from 2.0% in March. This represents the fastest pace in approximately two years (since March 2023).
• Transaction volumes: Deeds Office data indicates that transaction volumes remain significantly (approximately 16%) below pre-pandemic levels (4Q19), suggesting a protracted recovery in market activity.
• Estate Agents’ sentiment: Estate agents report a surge in positive sentiment, with activity ratings reaching a three-year high in 1Q25. However, market outcomes are still modest, as reflected in slow transaction volumes growth and slightly longer selling times (from 11 weeks in 4Q24 to 12 weeks and one day in 1Q25).

Buyer behaviour and market challenges

• Caution among buyers: The divergence between positive sentiment and market outcomes suggests lingering caution among buyers, potentially due to the ongoing impact of the pandemic-induced cost-of-living crisis, further exacerbated by global uncertainty.
• Affordability issues: Many prospective buyers, particularly in the affordable segments, may still face significant hurdles in the home-buying process related to affordability.

Outlook

• Consumer confidence: The recent dip in consumer confidence due to heightened global and domestic uncertainty is likely to disproportionately impact the affluent segments, potentially leading to slower sales and price stagnation.
• Affordable housing demand: In the lower-priced segments, potential interest rate cuts by the South African Reserve Bank and a potential 10% increase in the transfer duty threshold could stimulate demand. These factors suggest a potential shift in demand towards more affordable housing options amid increased uncertainty.

With the HPI averaging 1.8% year-to-date, there is an upside risk to our 1.9% forecast for 2025. We currently project house price growth to approach the 3% mark by 2026.

Read the full report here.