The FNB House Price Index (HPI) maintained its upward trajectory, averaging 2.6% y/y in May, up from 2.4% in April (revised from 2.2%). This acceleration was primarily driven by the middle-to upper-priced segments, while growth in the lower-priced segments was stable.

Market recovery primarily driven by supply contraction

Our proprietary market strength indices continue to signal a less deteriorated housing market. We show measured positivity because the recent strengthening has been further fueled by a sharper decline in supply than by a rise in demand. The recent hesitation in demand growth may reflect heightened global and domestic policy uncertainty—much of which has since eased. On the supply side, the contraction is largely due to a sustained decline in new housing stock, which is aligned with weak sentiment and anemic economic conditions. Year-to-date, the volume of newly completed homes is down 14.0%, following annual declines of 7.4% in 2024 and 25.9% in 2023.

Rental market remains subdued amid weak labour conditions

Stats SA’s rental market data continues to reflect relatively subdued demand, with rental inflation averaging just 2.9% in 1Q25—virtually unchanged from the previous quarter. Meanwhile, following a consistent downward trend since 4Q23, flat or apartment vacancy rates edged up to 6.7% in 1Q25, from 6.0% previously, according to Rode data.

Nonetheless, this remains below the 7.9% recorded in the same period last year. While rental market conditions vary significantly across major cities, most regions are experiencing strengthening demand-supply dynamics, except for the Gauteng metros (Johannesburg and Pretoria) where the market

softened in 1Q25. Overall, the slight uptick in vacancy rates, despite a continued decline in the supply of new flats and townhouses, may signal a shift from renting to homeownership, driven by declining borrowing costs and post-pandemic behavioral changes.