In the high interest rates environment, South Africa is likely to see continued demand for developments that combine lifestyle appeal, infrastructure certainty, security, and mixed-use resilience.
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If interest rates remain elevated for longer, South Africa is likely to see increased demand for affordable, high-quality lifestyle regions, particularly along the KZN South Coast, where value per square metre remains significantly stronger than in many saturated metropolitan markets.
The next phase of the property sector will continue to be driven by lifestyle-led migration away from dense urban centres, alongside growing demand for secure, self-contained estates that offer integrated amenities and long-term convenience, says Barto van der Merwe, the managing director of Renishaw Coastal Precinct.
He says these developments tend to provide greater value, stability and resilience across economic cycles.
“At Renishaw Coastal Precinct, we are already seeing increased interest from buyers and investors seeking developments that continue to perform well despite shifting economic conditions and interest rate pressures.”
Delivering the Statement of the Monetary Policy Committee(MPC) on Thursday, May 28, Lesetja Kganyago, governor of the South African Reserve Bank (SARB) said that since their last meeting in March, hopes for a quick end to the Middle East crisis have faded.
He said the Strait of Hormuz is still largely closed and oil prices have fluctuated around 100 dollars per barrel.
“In this context, global growth forecasts have been marked down, while inflation forecasts have been revised higher.
“Given the forecasts, we see upside risks to inflation."
Against this backdrop, the committee decided to increase the policy rate by 25 basis points, to 7%, effective from May, 29,” Kganyago said.
“The 25-basis-point hike reflects the Reserve Bank’s continued focus on stabilising inflation expectations in a challenging global and domestic environment," van der Merwe says.
“While higher rates are never welcome news for consumers, the broader property sector has proven its resilience through multiple interest rate cycles and continues to create long-term value.”
The MD says for homeowners, the immediate impact will be around affordability, but this is increasingly being offset by stabilising inflation and improved energy availability with more measured price growth in many regions.
For buyers, he says the rate increase may affect short-term purchasing decisions. However, he adds most investors and homeowners also understand that the current pressure is largely linked to global uncertainty rather than any domestic challenges.
For property investors, he says rate hikes often bring stronger rental demand, as potential buyers may delay purchasing decisions. This supports rental stability and, in some well-located nodes in KZN, rental growth.
“For investors and developers, higher rates tend to place greater emphasis on long-term fundamentals," van der Merwe says.
“Well-located and well-planned developments such as Renishaw Coastal Precinct become even more attractive because they offer diversified value drivers. These include residential opportunities alongside commercial, retail, and light industrial components within a single integrated precinct.
“In this environment, we are likely to see continued demand for developments that combine lifestyle appeal, infrastructure certainty, security and mixed-use resilience. Buyers are becoming increasingly selective and are prioritising long-term value over short-term market fluctuations,” the MD says.
According to the Renishaw Coastal Precinct, a large portion of the current inflationary pressure is being driven by global geopolitical instability.
It says ongoing tensions in the Middle East, particularly involving the United States and Iran, have created volatility around inflation expectations, fuel prices and investor sentiment globally.
“However, given the apparent lack of meaningful European support, my view is that the conflict may not have the longevity required to create a prolonged inflationary shock.” van der Merwe says.
The 25-basis-point hike is a little firmer than the market anticipated, says Stefan Botha, the director at Rainmaker Marketing.
He says this is not the outcome the property sector was hoping for, but given the fuel shock and where inflation has moved, it is understandable.
“What I would add is that owners and prospective buyers are still in a significantly better position than they were 12 months or so ago. Even with Thursday's increase, prime sits at 10.50%, which is below where it was this time last year and well off the 11.75% highs of 2024. So in the short term it stings, but I really don't see it as a reason for alarm.”
For homeowners, Botha says the hike means a modest increase in monthly bond repayments.
“It will be felt, but again, it's worth keeping in perspective against where rates were a year or two ago. For those who can, the sensible thing is to keep paying into the bond at the level you were already comfortable with, and not make long-term decisions off a single move.”
For tenants, he says rentals are still being driven more by stock shortages than by this decision, particularly in the higher-demand coastal and lifestyle areas.
For investors and developers, he says he does not expect this to change serious buying intent much.
“The buyers active in quality lifestyle and investment product tend to be less sensitive to a small rate shift. The real question, as always, is whether the product matches the buyer who's actually in the market. That hasn't changed today.”
The director says his sense is this is more of a defensive move tied to the fuel and geopolitical shock rather than the start of a longer tightening cycle.
He says once that pressure works through, he expects the conversation to shift back towards easing, although the timing is admittedly less certain than it looked at the start of the year when we were in a clear downward rates cycle.
“For me the things genuinely driving our market, semigration, infrastructure and the way families are choosing where to live, don't move with the repo rate. They are still very much in play, and that remains the more important story than any single decision,” Botha says.
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