Today’s (23 July, 2026) decision to leave the interest repo rate at 7% despite rising tensions in the Middle East and a strong possibility of increased inflation is good news for both residential property buyers and sellers according to Tyson Properties.
In May the Reserve Bank’s Monetary Policy Committee elected to increase the interest rate by 25-basis-points to counter rising inflation, resulting in a small but perceptible temporary tightening of the local property market. However, this is best seen as a short-term lull to protect the South African economy in the wake of escalating tensions in the Middle East.
Daniela Du Plessis of Tyson Properties believes this latest announcement by the Reserve Bank Monetary Policy Committee marks a welcome reprieve for property owners. She expects the downward rate cutting cycle to resume and even catch up with the continued levels in place at the end of 2025 just as soon as global tensions recede.
Meanwhile, the gathering impasse over the Strait of Hormuz will inevitably push fuel prices higher – a development that is out of the hands of local policymakers. On the negative side, this may exacerbate internal uncertainties such as ongoing anti-foreign national sentiment, growing tension in the run up to the November local government elections, increases in the price of electricity and a dip in global gold and commodity prices.
However, on the positive side, South Africa’s economy grew by 1.4% during the first quarter of 2026 – and this has been further buoyed by a stable balance of payments and stronger than expected rand.
Du Plessis believes another 0.25% interest rate hike remains on the table as inflation has breached the new 3% target set by the Reserve Bank and is even expected to continue to climb after July.
In the residential property market, a rate increase will elevate borrowing costs, reduce buyer affordability, and elevate default risks, Du Plessis admits.
The lower to middle segments of the property market will feel a future rate hike the most with many buyers expected to downsize expectations or choose to rent instead of buy during this waiting period. She says that those buying to rent are now more vulnerable to payment defaults as tenants struggle to navigate the impact of higher inflation on disposable incomes.
Loan applications, house prices
According to the Betterbond Index, although the May interest rate hike did see a slight drop in loan applications during the second quarter of 2026, they remain 5,7% higher than two years ago.
Average home prices continued to increase in both nominal and real terms during Q2. Buyers recorded growth nominal growth of 8.4%. This has outperformed inflation by a considerable margin and is likely to hold steady in the wake of ongoing optimism that a renewed cease fire in the Middle East will eventually emerge.
