The latest FNB Property Barometer for July 2025 shows that South Africa’s housing market is holding steady, with the FNB House Price Index (HPI) averaging 3.7% year-on-year. June’s figure was also revised up from 3.2% to match July’s 3.7%, signalling a notable moment — house prices are now rising slightly faster than inflation.
One of the most interesting developments this month is that, for the first time since the pandemic, sectional title properties (such as flats and townhouses) have edged ahead of freestanding homes in terms of annual price growth — 3.8% vs 3.7%.
Why the shift to sectional title?
A combination of factors appears to be shaping this change in buyer behaviour. After the sharp interest rate hikes of 2021–2023 and ongoing real wage stagnation, more buyers are opting for smaller, more cost-effective homes. With many companies calling employees back to the office, the demand for larger, home-office-friendly properties has also softened.
In addition, the premium once paid for bigger homes during the remote work boom is no longer as strong. This shift reflects a broader global trend where urban buyers are prioritising location, amenities, and maintenance convenience over sheer size.
Property development trends
While sectional title prices are climbing, supply constraints could push them even higher in the future:
Units completed (YTD): 4,866 flats and townhouses — up 13.5% from last year
Plans approved: Down 21.2%, suggesting fewer new projects in the pipeline.
This means that while developers have been delivering more units recently, they are not planning as many for the future — possibly due to rising construction costs, regulatory delays, and uncertainty over municipal service delivery.
If demand stays strong and supply remains limited, prices in the sectional title market are likely to keep rising, particularly in well-located areas with good transport links and amenities.
The bigger picture: what’s next for interest rates?
The South African Reserve Bank (SARB) has now firmly signalled a preference for the lower bound of its 3–6% inflation target, aiming for around 3%.
Here’s what that could mean for the property market:
Short term (2025–2026): Rates are expected to remain on hold as SARB works to anchor inflation expectations.
Medium term (from 2027): If the target is met, interest rate cuts could begin, possibly bringing the repo rate closer to 6% by 2028.
Impact on housing: Lower borrowing costs, combined with modest wage growth and stable inflation, would likely boost demand — especially in the low- to middle-income segments.
Key Takeaways for Buyers and Sellers
For buyers, sectional titles may offer better value at present, but with future supply expected to remain limited, prices in this segment could rise over time. Acting sooner rather than later may help secure a property at a more favourable price.
For sellers, demand for well-located, low-maintenance homes is on the rise. If you own a property that fits this profile, now could be an opportune moment to list, as buyer interest in these types of homes is strengthening.
For investors, the ongoing shift in buyer demand coupled with supply shortages in the sectional title market presents potential opportunities. This environment could create favourable conditions for both rental income and long-term resale value.
If you are wondering if estate living is right for you, read our guide to help you navigate the journey.