By Paul Stevens, CEO of Just Property
If the property market in 2025 had a theme, it was the return of confidence, but with its feet firmly on the ground. The market kept moving even as many households continued to feel the pinch, and we saw a renewed willingness to make long-term decisions again.
That shift showed up in the Absa Homeowner Sentiment Index for Q3 2025, where investing sentiment held at 84%, and buying versus renting sentiment held at 75%. South Africans still believe ownership and property-led wealth creation are worth working towards, even when affordability is tight.
So what did the market teach us this year, and what should homeowners and investors take 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. The South African Reserve Bank’s Quarterly Bulletin points to several shifts that lifted investor confidence, including South Africa’s removal from the Financial Action Task Force’s grey list, an improved fiscal outlook in the 2025 Medium Term Budget Policy Statement, the move to a 3% inflation target and an S&P foreign-currency sovereign rating upgrade, the first in two decades.
That matters for property because property is a long game. People do not buy homes or build portfolios when the future feels unmanageable. They do it when they believe they can make decisions that will still look sensible five or ten years from now. At the same time, confidence has to be matched with realism. GDP expanded by 0.5% in Q3 2025. This is a recovery that still needs protecting.
National house price inflation stayed positive through the year, even as the pace cooled. The FNB House Price Index eased to 4.9% year on year in October 2025, with month-on-month growth slowing to 0.1%. Prices continued to rise, but the market began to breathe more normally.
The deeper lesson is what drove performance where it was strongest. FNB’s view that constrained supply is a primary force behind current price growth lines up with what many of us have seen: well-priced, well-located homes still attract demand. It also reinforced a point investors forget at their peril: “the market” is never one market. FNB noted stronger performance in Cape Town and Tshwane, with Mangaung and Buffalo City under pressure. Wealth creation comes from choosing the right micro-market, not trying to time the country.
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, with the average rent at R9,286. Demand for rental accommodation remained a key driver of investor interest, but the year also made it clear that affordability pressure is building.
The share of tenants in arrears rose to 17.2% in Q3 2025, the highest since Q3 2024. PayProp’s measure of average disposable income after rent and debt payments fell to 20.9% in Q3 2025, down from 22.3% a year earlier, despite average earnings being higher. The message for landlords is straightforward: tenant selection and professional management are not optional extras. They are risk controls.
Lesson 3 – the rate cycle helped, but it did not solve everything
Interest rate relief was one of the year’s biggest practical wins, the latest cut in November bringing the repo rate down to 6.75% and prime to 10.25%. That easing supports affordability, improves confidence and gives first-time buyers in particular a bit more room to move. It also reinforces a wider point: when inflation expectations are drifting lower, it becomes easier for households and businesses to plan. Still, 2025 reminded us not to build a property plan on the assumption that rates will keep falling. Affordability needs a buffer, and good property decisions should hold up even if conditions tighten again.
Lesson 4 – the best property decisions were boring, consistent and long-term
When you look past the noise, the strongest outcomes in 2025 came from people who did the basics well. Homeowners who treated their bond like a wealth-building tool made progress. Investors who bought for sustainable yield, in areas with dependable demand, held their ground. Landlords who maintained their properties and priced correctly reduced vacancy risk.
The Absa HSI drivers tell the same story. The biggest reasons people feel positive about investing are practical: property accumulates value, it can deliver returns and it can generate income, supported by steady demand for rentals. The biggest concerns are equally practical: the economy, high prices, crime, job security and the Rand (though, at the time of writing, 15 December 2025, the Rand was trading at 16.78 against the dollar, sustaining its break below R17, and gold was at a seven-week high). But we are right to be wary of the volatility. The lesson is to plan around it: stress-test affordability, be conservative with escalation assumptions, and keep liquidity in reserve.
Commercial property – momentum is back, but it’s node-led and quality-led
Commercial property ended 2025 on firmer footing too, with industrial still setting the pace, retail stabilising in the right formats and office space improving in selective pockets. Broker data points to better liquidity, with demand reported to be ahead of supply across industrial, office and retail, and shorter time on market.
In office space, the direction is clear: tenants are choosing less space if it means better space. That puts the spotlight on quality, amenities, security and operational resilience. Owners of B- and C-grade stock will need refurbishment, repurposing or smarter tenant-fit leasing to stay relevant.
The improving outlook for commercial property investors is being reinforced in the listed market. According to the SA REIT Association, South Africa’s listed property sector delivered a +9.1% total return in November 2025, taking year-to-date performance to 37.9% – ahead of the Global REIT Index and major developed markets over the same period, and beating both the equity market and bonds.
Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments and compiler of the monthly SA REIT Chart Book, attributed this to “improving property fundamentals across South Africa over the past two years, which have translated into lower vacancy rates and positive market rental growth”.
Importantly, it also aligns with what we are seeing on the ground in real assets, signalling a more constructive, opportunity-led stance as fundamentals stabilise.
What this means for 2026 – cautious optimism, real opportunities
I am optimistic about 2026, but it is the kind of optimism that comes with clear conditions. If inflation expectations remain anchored and borrowing costs continue to ease over time, the market has room to strengthen. If household finances keep improving incrementally, confidence can translate into activity.
For buyers, the lesson is to focus less on finding “the perfect time” and more on finding the right property at the right price in the right area. A cooling pace of price growth can create negotiating room where sellers are realistic, but the best homes in the best pockets will still attract competition.
For investors, rental demand remains a powerful opportunity: to pair yield with discipline, buy where demand is deep, keep the property in good condition, screen tenants properly and manage proactively. In commercial property, the same discipline applies. Industrial and logistics remain compelling where supply is constrained, retail will favour the right format in the right catchment, and offices will continue to reward quality and tenant fit.
2025 reminded us that property wealth is rarely built in a single leap. It is built by making good decisions consistently, protecting against the downside and giving time the space to do its work.
If we take that lesson into 2026, there is every reason to believe the next chapter can be stronger than the last.
