The South African Reserve Bank (SARB) has increased the repo rate by 25 basis points to 7%, with the prime lending rate now at 10.5%.
Citing heightened geopolitical uncertainty, rising oil prices, and growing inflationary risks, SARB Governor Lesetja Kganyago said global growth forecasts had weakened while inflation expectations were rising. He warns that South Africa faces “a painful combination of higher global uncertainty and reduced disposable income” that will weigh on both household spending and investment.
Kganyago said the Monetary Policy Committee (MPC) acted pre-emptively to prevent inflation becoming entrenched, particularly as second-round effects begin filtering through the economy. While headline inflation rose to 4% in April, driven largely by fuel costs, the SARB warned that food prices, transport costs, and broader services inflation are likely to rise further. He also cautioned that further geopolitical shocks and potential El Niño-related drought conditions could place additional upward pressure on inflation and interest rates.
The real estate industry reactions in summary
Samuel Seeff, Chairman of the Seeff Property Group
The Reserve Bank’s decision to increase the repo rate by 25 basis points is premature and a blow to the economy and property market. While inflation has edged higher, the current pressures are largely external and temporary, driven by fuel and geopolitical shocks rather than excessive domestic demand. Consumers are already under severe strain from rising living costs and weakened disposable income, and higher borrowing costs will only further reduce affordability and delay recovery in the housing market.
Bradd Bendall, National Head of Sales at BetterBond
The increase in the prime lending rate reflects mounting pressure from ongoing geopolitical tensions in the Middle East, rising fuel costs, and persistent inflationary risks. While affordability pressures will intensify, especially for first-time buyers, the housing market continues to demonstrate resilience with steady growth in bond applications and continued buyer activity in high-demand areas. Financially prepared buyers can still find meaningful opportunities despite the higher-rate environment.
Berry Everitt, CEO of the Chas Everitt International Property Group
The latest rate hike is a timely reminder for prospective homebuyers and property investors to prioritise affordability and financial resilience. Prospective buyers should avoid borrowing at the maximum level approved by banks and instead focus on purchasing conservatively to ensure they can comfortably absorb future cost increases while still building long-term wealth through property ownership.
Adrian Goslett, CEO and Regional Director of REMAX Southern Africa
The hike reflects a cautious economic outlook as geopolitical tensions and rising commodity prices continue to place pressure on inflation. Although higher borrowing costs may slow some property decisions and place strain on household budgets, the residential market has historically shown resilience through changing rate cycles. Long-term demand for property remains intact, particularly among buyers who continue to view property as a stable investment asset despite short-term volatility.
Lytania Johnson, CEO of FNB
The increase in interest rates reflects the impact of global factors beyond the control of the Reserve Bank, particularly elevated oil prices and ongoing geopolitical uncertainty. While the adjustment is measured, it arrives at a difficult time for the domestic economy, which still requires stronger growth and job creation. Consumers considering large debt-funded purchases should remain cautious as inflationary pressures are expected to persist through the remainder of 2026 and into 2027.
Mamello Matikinca-Ngwenya, Chief Economist at FNB
The SARB’s decision highlights growing concern around second-round inflation effects as rising fuel and energy costs begin feeding into broader consumer prices. The central bank has acted proactively to prevent inflation expectations from shifting too far away from its 3% target. With inflation expectations data due ahead of the next MPC meeting, there remains a possibility of further tightening should inflation risks intensify.
Rhys Dyer, CEO of the ooba Group
The latest increase marks the first rate hike in three years and comes at a time when consumers are already facing mounting affordability pressures. Rising fuel prices, electricity tariffs, and municipal costs continue to squeeze household finances, yet homeownership demand remains resilient, particularly among younger buyers entering the market. Banks are also continuing to support the sector through competitive lending conditions, including zero-deposit and cost-inclusive home loans.
Dr Andrew Golding, Chief Executive of the Pam Golding Property Group
Although higher borrowing costs will place additional pressure on household budgets, the increase is modest and unlikely to derail residential market activity in the short-term. Banks remain supportive of the sector through competitive lending practices, helping offset affordability pressures. At the same time, rising transport and living costs are accelerating demand for smaller, well-located properties close to workplaces, schools, and transport networks.
Greg Dart, Director of High Street Auction Company
The Reserve Bank’s defensive stance sends an important signal of stability to both local and international investors during a period of heightened uncertainty. While the rate increase may create some short-term pressure in the residential market, savvy investors often recognise opportunities during tightening cycles, particularly in distressed sales or undervalued commercial and industrial assets. Alternative funding models also continue to reduce reliance on traditional bank finance in parts of the market.
Neil Abernethy, spokesperson for Tyson Properties
The Reserve Bank had little choice but to implement a defensive 25 basis point increase as South Africa navigates the risks of higher fuel prices, inflationary pressures, and global geopolitical uncertainty. While the move may feel like an unwelcome speed bump for consumers, the property market is entering this cycle from a position of relative strength. Importantly, the prime lending rate remains below the highs experienced in 2024, offering some relief for existing homeowners.
Stephen Whitcombe, MD of the FIRZT Property Group
While the latest interest rate increase will place further pressure on consumers, prospective buyers should not abandon their property goals. Instead, buyers should focus on affordability, securing competitive home loan rates, and taking a long-term view of property ownership. Johannesburg still offers strong relative value for first-time buyers and young professionals, while property remains one of the most effective long-term wealth creation tools despite changing interest rate cycles.
