On Wednesday, June 17, Statistics South Africa (Stats SA) announced that consumer inflation jumped to 4.5% in May from 4.0% in April, reaching the highest rate since July 2024, when it was 4.6%. The monthly change in the consumer price index (CPI) was 0.7% in May.
A breakdown of the CPI components shows that property owners and tenants are facing a much higher inflationary environment, reducing housing affordability , says Emeritus Professor François Viruly, a property/real estate economist and chief economist at Datazone.
He says to start with, the CPI for administered prices (which includes electricity, water, and municipal charges) increased by a staggering 13.7% (May 2026 vs May 2025).
“This reflects a strong upward trajectory in 2026, from 3.7% in January, 1.7% in February, 2.1% in March and 8.3% in April. Fuel prices increased by 28.7%.”
The chief economist says this affects housing affordability through transport costs to and from a home. He says the cost of insurance also increased above the inflation rate, at 5.8%.
“Actual rentals increased in line with the inflation rate of 4%, with Western Cape rentals rising by 3.4% (possibly suggesting that affordability is affecting rental increases), compared to Gauteng at 5.3%.”
The rise in the inflation rate experienced so far may further reduce housing affordability
According to Viruly, the overall conclusion is that, although rentals are rising in line with the inflation rate, housing affordability is being adversely affected by increases in public-sector-determined administered prices and the recent rise in petrol prices.
There is further risk that the rise in the inflation rate experienced so far in 2026 will further reduce housing affordability through interest rate increases, he adds.
Property market remains resilient despite growing external pressures
Meanwhile, consistent with broader South African (SA) market conditions, the property market remains resilient despite growing external pressures, says Koketso Mano, senior economist at FNB.
She says the prolonged conflict in the Middle East has increased operating and living costs, prompting a measured response from the central bank.
“At the same time, fiscal policy support has been constrained by limited buffers and the need for fiscal consolidation. While resilient commodity export prices, improving foreign sentiment towards SA, and lower real interest rates continue to support financial conditions, affordability pressures have intensified,” Mano says.
The bank released a report that highlights the strength of the House Price Index (HPI) three months after the onset of the conflict and draws on insights from the 2Q26 Estate Agent Survey to assess how market sentiment and activity have evolved.
Property market to remain resilient in the near term
Overall, FNB says it expects the market to remain resilient in the near term, supported by these favourable tailwinds. However, affordability pressures are emerging as a growing downside risk.
“While estate agents remain satisfied with market conditions and activity continues to be driven largely by households with financial buffers, vulnerability is increasing among first-time and lower-income buyers facing tighter budgets and stricter lending criteria.”
Over the longer term, Mano says a more productive SA economy and stronger policy buffers should reduce vulnerability to external shocks, supporting household financial resilience and the sustained performance of the property market.
Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond, recently said that while traditional equity markets have experienced volatility, the property sector has remained steady, with house price growth continuing to outpace inflation.
He said this stability is being driven largely by first-time buyers, whose activity has pushed house prices in this segment of the market up by 9% during the second quarter of this year. First-time buyer homes have now reached an average price of R1.4 million, while the average house price for all buyers sits at R1.7 million, he added.
Data from BetterBond’s latest June Property Brief shows that the listed real estate sector posted a robust 16.6% year-on-year improvement by the end of May, also outpacing inflation.
This was said to indicate continued investor interest in property, even as equities faced ongoing geopolitical and macroeconomic headwinds.
While the JSE All Share Index (ALSI) peaked at 130,000 points in March before retracting to 112,000 on 1 June, the property sector is said to have remained comparatively buoyant.
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