Why the residential property market is expected to thrive in 2026

A vast majority of estate agents expect South Africa's residential property market to improve this year. 

This expectation is reinforced by many property observers who say they are "cautiously optimistic" that demand will stabilise as interest rates moderate and consumer confidence improves after a period of stagnation and affordability pressures.

“While 2025 was a tougher year than many Estate Agents anticipated, the confidence we’re seeing going into 2026 is notable. Expectations are being reset, but agents are clearly encouraged by signs of stabilising demand, easing interest rate pressure and improving sentiment across key residential segments,” says Hayley Ivins-Downes, managing executive of Lightstone’s Real Estate.

Lightstone's annual survey of estate agents at the end of 2025 found 69% said they did not reach volume targets in 2025, and 62% said they fell short of value targets.

However, despite falling short in 2025, 87% of estate agents said they expected to reach sales volume targets in 2026, up marginally from 86% the year before, where just 26% reached their targets.

Estate agents are less bullish on reaching sales value targets at 82%, compared to 85% the year before.

While the findings suggest that nearly two-thirds of agents performed worse than anticipated in 2025, the tough year has not dented expectations for 2026, with 71% of estate agents either "very optimistic" (27%) or "somewhat optimistic" (44%) about growth opportunities over the next twelve months.

A fifth (20%) are "neutral" or "uncertain", with just 9% either "somewhat" or "very pessimistic".

Just more than two-thirds expect demand for property to rise in 2026, while 66% expect demand to rise in the rental market.

Lightstone's data showed that between January and October 2025, residential property transaction values in South Africa rose by 12.5% year-on-year to R276 billion, while the number of sales remained largely unchanged from the corresponding period in 2024.

Homebuyers are showing renewed interest. By the third quarter of 2025, BetterBond’s bond applications were up 14.6% year-on-year-the highest levels in three years-and 26% above the lows of 2023.

First-time buyers and upgraders may accelerate activity, particularly in suburban and lifestyle nodes outside major metros. However, affordability challenges remain for middle-income households, thereby keeping growth moderate rather than explosive.

Investment activity in rental and income-producing residential assets could rise, driven by institutional interest. Continued urbanisation and demand for secure, well-located housing will support selected segments, but overall growth will hinge on economic performance, financial accessibility and employment trends.

Estate agents noted a shift in buyer preferences in 2025, with security becoming the primary attribute house buyers were looking for when compared with 2024 (30%:19%).

All other attributes-including green features, buy-to-rent, size to work from home, and lifestyle and amenities-fell in importance in 2025. Of the four, lifestyle and amenities were next most important after security at 26%, down from 33% the year before, followed by enough space to accommodate a home office.

“What’s clear from the data is that buyers are looking for secure homes. Security, location and long-term value are outweighing lifestyle extras, while downscaling and relocation continue to drive seller activity.

"These preferences reflect structural changes in how households are responding to affordability pressures as well as work and lifestyle patterns,” says Ivins-Downes.

Downscaling and relocation accounted for nearly 60% of homeowners selling up and moving on. A third of sellers listed downscaling as the primary reason they sold in 2025, with 19% saying lifestyle change was the driver, while 14% said it was financial difficulty.

Relocating to another province (14%) and relocating to another city or town (10%) made up 24%.

“South Africa’s current interest rate cycle, coupled with a slightly improved economic outlook, is creating favourable opportunities for first-time buyers to enter the property market while also affording existing homeowners to reassess their life stage and consider a change in their homeownership journey,” said Mfundo Mabaso, product head at FNB Home Structured Lending in January. 

He added that while scaling up for a bigger home often means higher mortgage repayments, increased maintenance, insurance, and other household-related costs, scaling down, on the other hand, can lower homeowners’ monthly expenses and unlock funds for travel, savings, or retirement planning.

In today’s economic climate, he said, with fluctuating interest rates and property market shifts, understanding your affordability and checking your credit profile continues to be largely important as it will impact the outcome of one's next property move.

The head said downsizing is not just about saving money, but it can also support a greener lifestyle that allows homeowners to invest in alternative backup electricity and water supply.

He said this will help make the home more effective in terms of utilities and increase the overall property value. Upsizing may be ideal for multi-generational living or creating dedicated spaces for homeschooling or remote work.

INDEPENDENT MEDIA PROPERTY