The South African housing market is entering the full swing of 2026, which FNB believes marks a critical cyclical turning point.
Following a prolonged post-pandemic adjustment phase, when the repo rate hit a 15-year high of 8.25%, market conditions are starting to change.
This is characterised by supply‐led price resilience, leading into a phase of gradually improving, increasingly broad‐based demand, according to FNB.
“This transition follows what was effectively a consolidation year in 2025, during which household balance sheets stabilised, inflation declined sharply, and monetary policy began to ease more meaningfully,” said FNB.
The emerging recovery thus reflects the strengthening of fundamentals rather than speculative excess.
Affordability conditions are also improving, with real incomes recovering, and net credit growth increasing among higher-quality borrowers.
These developments suggest the housing market is entering a more sustainable expansion phase, with activity expected to drive price growth through 2026.
FNB noted that the macroeconomic environment has become decisively more supportive of housing market conditions.
Headline inflation averaged 3.2% in 2025, the lowest level in two decades, and it is expected to remain anchored close to the South African Reserve Bank’s new target of 3% in 2026.
This disinflation has thus created space for the SARB to continue loosening its grip on monetary policy.
FNB expects a cumulative 50-basis point reduction in interest rates during 2026, which is in line with most other financial services providers. This would reduce the repo rate to 6.25%.
There is also a potential for more easy, if inflation dynamics prove more favourable than anticipated.
Easing debt
Lower policy rates should materially ease monthly debt-servicing costs across South Africa, improve affordability, and increase housing demand.
Notably, these gains follow a period of household balance-sheet repair. Credit data from late 2025 showed that strong new lending activity was alongside subdued growth in net household debt.
This indicates that the housing market is increasingly underpinned by less‐leveraged, high‐quality borrowers.
This shift in the composition of credit growth suggests that the next stage of the housing cycle will likely be more resilient to shocks.
Demand is expected to be primarily supported by income growth and improved affordability rather than by leverage expansion.
“From a housing market perspective, the significance of this macro shift lies less in stimulating speculative demand and more in restoring confidence,” said FNB.
Although improved affordability encouraged households that had postponed purchases during the hiking cycle, especially first-time buyers, to re-enter the market, it will also drive investor-driven demand.
FNB noted that the macro environment now supports a gradual recovery in housing demand rather than a rapid or debt‐driven upswing.
“Overall, the housing market outlook for 2026 points to the early stages of a durable and balanced recovery,” said the Big Four bank.
“Anchored inflation, easing but disciplined monetary policy, improving real incomes, and structurally constrained supply create an environment conducive to steady growth in activity and moderate house price inflation.”
