As South Africa heads into the 2026 national Budget cycle, attention often falls on ambitious growth targets, policy reforms, and infrastructure pledges. Yet in the residential property market, confidence is earned gradually.
Source: Supplied. Reinier van Loggerenberg, chief executive officer of Craft Homes.
After a challenging decade for most homeowners—characterised by rising interest rates, shrinking property values, and strained household finances—buyers have become cautious and discerning.
From a developer’s perspective, 2026 is less about dramatic rebounds and more about steady predictability. While recovery remains fragile, subtle signs of stability are emerging, offering a foundation for disciplined investment, measured growth, and renewed optimism in the country’s housing sector.
The latest Absa Homeowner Sentiment Index (Q4 2025) captures this spirit well: overall consumer confidence in the property market hit 87%, the joint-highest level on record, with property still seen as a secure, value-creating asset that builds long-term wealth and stability.
What has changed
Over the past 18 months, the economic environment has begun to stabilise in ways that matter for housing. Interest rates have eased meaningfully from their peak (with the repo rate holding at 6.75% and prime at 10.25% as of early 2026, following cuts in 2025). Inflation expectations are narrowing. Credit conditions, while still tight, are no longer deteriorating. Domestic policy direction, though slow, is less erratic than it has been in years.
This is not a boom cycle. But it is the first time in a long while that the fundamentals are pointing in the same direction.
For buyers, affordability is starting to improve. Lower borrowing costs translate directly into higher approval odds and better monthly cash-flow outcomes. At the same time, real wage growth, though modest, is no longer consistently negative. For many households, that combination is the difference between perpetual postponement and a cautious re-entry into the market.
The Absa data reflects this: 66% of respondents see the current market as a buyer's market, with properties viewed as reasonably priced, and buying sentiment strong at 77% (up quarter-on-quarter). Younger South Africans under 44 are particularly optimistic (89% confidence) and drove half of recent purchases, while inland areas show notably higher enthusiasm than coastal ones across most measures.
We are seeing this reflected in buyer behaviour. Demand is recovering, but it is disciplined. Purchasers are doing their homework. Security, reliable infrastructure, location and long-term running costs now outweigh speculative upside. Buyers are looking for certainty and value that holds; preferences that align with the report's emphasis on ownership over renting for financial and lifestyle benefits.
The implications for developers
In this market, success depends on choosing the right nodes, designing for real end-users, and delivering homes that work within today’s financial realities. Smaller, more efficient units. Mixed-use precincts that reduce transport costs.
Developments located close to employment centres, lifestyle amenities and public infrastructure. These are responses to how South Africans are living and spending now, trends like co-living (36% of homeowners sharing with family to cut costs) and a focus on practical, resilient features.
At Craft Homes, we are also seeing the return of long-term thinking from investors. Rental demand remains strong in well-located urban nodes, particularly where developments offer security, energy resilience and professional management. Investors are not expecting outsized capital gains in the short term, but they are increasingly comfortable with steady yields in a stabilising environment, echoed in the Absa HSI's investing sentiment at a near-record 85%.
This is where the national policy conversation becomes relevant. Ahead of the Budget, the housing sector needs execution: faster planning approvals, predictable zoning decisions, reliable bulk infrastructure, and functional municipal services. These are practical enablers of private investment.
Residential development is one of the fastest ways to convert policy certainty into economic activity, creating construction jobs, professional services, supply chains and long-term community growth. But when approvals stall, when service connections are uncertain, or when regulatory processes are opaque, projects pause.
Capital waits. Buyers hesitate
Encouragingly, there are signs that collaboration between the public and private sectors is slowly improving. Where municipalities engage early, co-ordinate infrastructure planning and provide clear timelines, development follows. The lesson is simple: predictability unlocks capital.
Another notable shift is in seller behaviour. While some sales are still driven by financial pressure or relocation, a growing portion of transactions are lifestyle-motivated. Downscaling, simplifying and relocating closer to work or family are becoming dominant themes. This reinforces the importance of offering diverse housing typologies rather than one-size-fits-all solutions.
Importantly, improved sentiment does not mean risk has disappeared. Credit stress remains elevated, municipal performance is uneven, and affordability constraints are still real for many households. The recovery, such as it is, is fragile. That is why reckless optimism would be misplaced. But pessimism is no longer accurate either.
Gerard Abrahamse 20 Jan 2026 South Africa’s residential market is beginning to reflect an economy that is slowly repairing itself. Not dramatically. Not evenly. But measurably. For the first time in years, buyers, sellers, lenders and developers are operating within a framework that feels less volatile and more navigable.
As we look to the year ahead, the opportunity is to protect and extend this fragile stability. If government picks up the pace themselves on faster delivery, approvals, infrastructure and services, then the private sector and the people can just keep on like we have for the last decade by investing, building, innovating and pushing ahead.
With strong underlying resilience and disciplined demand already in play, housing will accelerate as the cornerstone of household wealth and urban regeneration. Let's get going properly, together.
