The latest industry data suggests that would‑be homeowners are putting buying decisions on hold as increases in fuel and food prices, plus a pause in interest rate cuts, prompt consumers to tighten their belts.
Mortgage originators have seen a slowdown in the growth in home loan applications following the Reserve Bank’s decision in March to keep interest rates on hold — the second time it has done so this year. This comes after a cumulative 150 basis point (bp) drop in interest rates in the 14 months to November.
BetterBond’s 6.1% year‑on‑year uplift in the number of mortgage applications processed in the first quarter is well below the 16% year‑on‑year growth recorded by the group last year.
Bradd Bendall, BetterBond’s head of sales, says the high cost of living is making it increasingly difficult for consumers to take on mortgage debt, particularly first‑time buyers and lower-income households.
House prices, which recently returned to real (after‑inflation) growth after a four‑year slump, are also under pressure. In March the average price paid by ooba’s home loan clients dipped, albeit marginally, to R1.74m from a record high of R1.75m in February.
Although ooba’s average house price for the first quarter is still 4.7% higher year on year, CEO Rhys Dyer expects the full impact of high fuel prices and logistics-driven costs to show up only in the April numbers.
He says the oil price shock and supply shortages — compounded by rand weakness — will weigh heavily on consumer confidence and already stretched household budgets. “The longer the Middle East conflict and energy crisis persist, the greater the impact will be on the housing market.”
FNB’s latest housing index reflects a similar trend, with price growth softening slightly to 5.7% in March from a four‑year peak of 5.8% in February (see graph). That follows near‑zero growth in 2023/2024 and is the strongest performance since mid‑2021, when FNB’s housing index peaked at close to 8%. The bank’s data shows that house price growth started to outpace inflation only from mid‑2025.
Before February most economists were still expecting 2026 to be a bumper year for the housing market, with further rate cuts expected to draw buyers back into the market. Many have now adopted a more cautious stance.
The longer the Middle East conflict and energy crisis persist, the greater the impact will be on the housing market
— Bradd Bendall
Still, FNB senior economist Koketso Mano says that while the Middle East conflict will slow the housing recovery, it won’t necessarily derail it. She tells the FM that house price growth has been stronger than expected in the six months to February. “So the impact of any weakness will be offset by the stronger starting point.”
Mano says housing activity is also likely to be propped up by international and higher-income buyers, who are less affected by cyclical headwinds.
Besides, Mano expects inflation to remain below 4% on average for 2026. In addition, FNB has only slightly lowered its GDP growth forecast for the year, from 1.5% to 1.3%. Mano still expects a rate cut later this year, though only one of 25bp instead of the two predicted for 2026 earlier this year.
Independent economist John Loos is less bullish. He says interest rates are likely to remain unchanged for the rest of the year. The Bank, he says, could even hike rates, depending on what happens with inflation. Higher rates would eat into consumer spending — particularly big‑ticket purchases such as property.
Given South Africa’s strong reliance on consumer spending for economic growth, Loos is also sceptical that GDP growth this year will exceed 2025’s 1.1%. He expects no more than 0.5%‑1% for the year as a whole, “as we await greater stability in the Gulf region”.
Loos says the recent slowdown in mortgage lending is not unexpected, given how sensitive housing demand is to interest rate movements. “Typically, the demand‑side response to rate movements is swift,” he says.
Data from the Bank suggests that mortgage lending may already have peaked late last year, reflecting the slower pace of rate cuts in the second half of 2025 and the lack of cuts since November.
While housing activity is likely to cool in the coming months, Loos says the Western Cape will continue to buck the broader trend. He notes that the province was nearing 10% year‑on‑year house price growth towards the end of 2025, compared with significantly lower growth of 4.6% in Gauteng and 3.7% in KwaZulu‑Natal.
“The Western Cape will emerge from a period of weaker housing demand in better shape than the other provinces. It appears to have built momentum that is difficult to stop due to semigration … and foreign buying.”
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