While recent interest rate cuts have helped revive SA’s residential property market, FNB says its data shows that constrained property supply appears to be the primary force driving the current upward price growth.

By metro, property prices are performing strongly in Cape Town and Tshwane, supported by favourable demand-supply dynamics while Mangaung and Buffalo City are under pressure, says FNB Economist, Siphamandla Mkhwanazi, with the latter likely reflecting the impact of a frail local manufacturing sector.

The upward trend in the supply of apartments and townhouses persists with year-to-date supply of new stock of both, up 21.8% compared to October in 2024 while the volume of newly built houses is down 7.3%.

Year-to-date, building plans approved by municipalities for housing plans has declined by 5.7% with apartments and townhouses down 18.2%, implying that recovery in the current supply of apartments and townhouses is unlikely to endure.

“Overall, current and projected supply dynamics support our view of a broader residential price upcycle, underpinned by easing inflation, lower borrowing costs, and modest real wage gains,” he notes.