Paul Stevens | CEO | Just Property | mail me |
If the property market in 2025 had a theme, it was the return of confidence. However, that confidence kept its feet firmly on the ground. The market continued to move even as many households still felt the pinch. At the same time, we saw a renewed willingness to make long-term decisions again. These were early lessons from 2025 that shaped behaviour across the sector.
That shift appeared clearly in the Absa Homeowner Sentiment Index for Q3 2025. Investing sentiment held at 84%. Buying versus renting sentiment remained steady at 75%. Despite tight affordability, South Africans still believe in ownership. They also continue to believe in property-led wealth creation. These signals reinforce some of the most important lessons from 2025.
Insights for 2026
So what did the market teach us this year? More importantly, what should homeowners and investors carry into 2026?
Lesson 1 – confidence is back, but it is being earned
One of the most encouraging developments in 2025 was the improvement in sentiment around South Africa’s economic direction. Several macroeconomic shifts supported this change.
The South African Reserve Bank’s Quarterly Bulletin highlights these developments clearly. South Africa exited the Financial Action Task Force’s grey list. Fiscal outlooks improved in the 2025 Medium Term Budget Policy Statement. Authorities moved to a 3% inflation target. S&P also issued a foreign-currency sovereign rating upgrade, the first in two decades.
This matters deeply for property. Property is a long game. People do not buy homes or build portfolios when the future feels unmanageable. Instead, they invest when decisions appear sensible five or ten years ahead. At the same time, confidence must align with realism. GDP expanded by 0.5% in Q3 2025. This recovery exists, but it still needs protection. That balance forms one of the core lessons from 2025.
House price inflation remained positive throughout the year. However, the pace slowed. The FNB House Price Index eased to 4.9% year on year in October 2025. Month-on-month growth slowed to 0.1%. Prices continued to rise, but the market began to normalise.
The deeper lesson lies in what drove performance where it was strongest. FNB’s view points to constrained supply is a primary driver of price growth. This aligns with market experience. Well-priced, well-located homes continue to attract demand. It also reinforces a critical reminder. “The market” is never one market. FNB recorded a stronger performance in Cape Town and Tshwane. Mangaung and Buffalo City remained under pressure. Wealth creation depends on choosing the right micro-market, not timing the country. This insight stands out among the lasting lessons from 2025.
Lesson 2 – rentals stayed resilient, but affordability pressure increased
The PayProp Rental Index for Q3 2025 shows national rental growth at 4.9% year on year. The average rent reached R9,286. Rental demand remained a key driver of investor interest. However, the year also made one reality clear. Affordability pressure is building.
The share of tenants in arrears rose to 17.2% in Q3 2025. This marked the highest level since Q3 2024. PayProp’s measure of average disposable income after rent and debt payments fell to 20.9%. A year earlier, it stood at 22.3%. This decline occurred despite higher average earnings. For landlords, the message is clear. Tenant selection and professional management are no longer optional. They function as essential risk controls.
Lesson 3 – The rate cycle helped, but it did not solve everything
Interest rate relief delivered one of the year’s most practical wins. The November cut brought the repo rate down to 6.75%. Prime fell to 10.25%. This easing supports affordability. It also improves confidence.
First-time buyers, in particular, gained more room to manoeuvre. However, 2025 delivered an important reminder. Property plans should not assume that rates will keep falling.
Lower inflation expectations help households and businesses plan more effectively. Still, affordability needs buffers. Sound property decisions must hold even if conditions tighten again. This stands as another of the hard-earned lessons from 2025.
Lesson 4 – The best property decisions were boring, consistent and long-term
When the noise fades, the strongest outcomes in 2025 share a pattern. They came from people who did the basics well. Homeowners who treated their bond as a wealth-building tool made steady progress. Investors who bought for sustainable yield in dependable areas held their ground. Landlords who maintained properties and priced correctly reduced vacancy risk.
The Absa HSI drivers tell the same story. Positive sentiment rests on practical foundations. Property accumulates value. It can deliver returns. It can generate income through steady rental demand. Concerns are equally practical. They include the economy, high prices, crime, job security and the Rand.
At the time of writing, 15 December 2025, the Rand traded at 16.78 to the dollar. It sustained its break below R17. Gold reached a seven-week high. Volatility remains a risk. The lesson is not to fear it, but to plan for it. Stress-test affordability. Use conservative escalation assumptions. Keep liquidity in reserve.
Commercial property – momentum is back, but it is node-led and quality-led
Commercial property ended 2025 on firmer footing. Industrial property continued to lead. Retail stabilised in the right formats. Office space improved in selective pockets. Broker data shows better liquidity across sectors. Demand now exceeds supply in industrial, office, and retail segments. Time on market has shortened.
In office space, the direction is clear. Tenants prefer less space if it delivers better quality. As a result, quality, amenities, security and operational resilience matter more than ever. Owners of B- and C-grade stock face clear choices. They must refurbish, repurpose, or adopt smarter tenant-fit leasing to remain relevant.
Listed markets reinforce this improving outlook. According to the SA REIT Association, listed property delivered a +9.1% total return in November 2025. Year-to-date performance reached 37.9%. This outperformed the Global REIT Index and major developed markets. It also beat both equities and bonds.
Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments, attributes this performance to improving fundamentals. He points to lower vacancy rates and positive rental growth over the past two years. Importantly, this aligns with on-the-ground signals in real assets. Together, they point to a more constructive and opportunity-led stance.
What this means for 2026 – cautious optimism, real opportunities
I am optimistic about 2026. However, this optimism comes with conditions. If inflation expectations remain anchored and borrowing costs ease gradually, the market can strengthen. If household finances improve incrementally, confidence can convert into activity.
For buyers, the priority should shift. Focus less on finding the “perfect time”. Focus more on the right property, at the right price, in the right area. Slower price growth can create negotiating room. However, the best homes in the best pockets will still attract competition.
For investors, rental demand remains compelling. The opportunity lies in pairing yield with discipline. Buy where demand runs deep. Maintain properties well. Screen tenants carefully. Manage proactively. In commercial property, the same principles apply. Industrial and logistics remain attractive where supply is constrained. Retail will reward the right format in the right catchment. Offices will continue to favour quality and tenant fit.
Ultimately, 2025 reminded us of a timeless truth. Property wealth rarely comes from a single leap. It grows through consistent decision-making. Property wealth depends on protecting against downside risk. It rewards patience and time. If we carry those lessons from 2025 into 2026, there is every reason to believe the next chapter can be stronger than the last.