South Africa’s economy is sending far more positive signals than most headlines suggest - and the property sector is directly benefiting from them.
In this edition of the Property Economy Series, Phoenix Bonds unpacks insights from economist Dr Roelof Botha to show how three powerful forces are aligning to support the next phase of the property cycle:
- A stronger rand
- A growing trade surplus
- Strong growth in private sector capital assets
Together, these trends are improving South Africa’s economic stability, lowering inflation pressure, and increasing the probability of interest rate cuts - all of which are highly supportive of the property market.
1. A Stronger Rand Improves the Odds of Interest Rate Cuts
South Africa’s currency has had an exceptional run, significantly strengthening against the US dollar and outperforming many other global currencies.
By the end of 2025, the rand was almost 14% stronger against the US dollar than a year earlier. This continued momentum into December has improved the likelihood of another interest rate cut at the Reserve Bank’s January MPC meeting.
Why the rand matters for property
A stronger rand helps to:
- Lower the cost of imports (including fuel, building materials, and consumer goods)
- Contain inflation
- Give the Reserve Bank room to reduce interest rates
Lower interest rates directly improve home loan affordability and buyer confidence - two of the biggest drivers of property demand.
Why the rand is strong
Healthy balance of payments
One of the main supports for the rand is South Africa’s balance of payments, which reflects how money flows between South Africa and the rest of the world.
Over the past two years:
- The trade account has been in surplus
- The financial account has also been in surplus
This means more money is flowing into South Africa than out, supporting currency stability.
A weaker US dollar
The rand has also benefited from a softer US dollar, which has been weighed down by:
- So-called “Trump tariffs”
- Broader economic policy uncertainty in the US
- A narrowing yield advantage of US bonds
Since January 2025, the yield on long-term US bonds has lost 94 basis points relative to German bonds. This has reduced the appeal of the dollar for global investors.
Further US interest rate cuts expected in 2026 may continue to weaken the dollar, indirectly supporting the rand.
Inflation remains under control
The strong rand has helped keep inflation low:
- Producer Price Inflation (PPI) remains below 3%
- Consumer Price Inflation (CPI) is within the Reserve Bank’s target range of below 4%
This creates favourable conditions for the Reserve Bank to continue cutting rates. With some luck, this cycle could see prime fall to 10% in early 2026, the same level seen just before the Covid-19 pandemic.
2. Trade Surpluses Are Supporting Economic Stability
Despite concerns that global trade tensions and tariff wars could destabilise South Africa’s trade position, these fears have not materialised.
South Africa’s exports are heading for an all-time record annual high.
- Total exports for the first 11 months of 2025 reached R1.9 trillion
- This already exceeds the previous record set in 2023
As a result, South Africa recorded a trade surplus of nearly R180 billion during 2025, preventing unnecessary pressure on the country’s balance of payments.
Key export drivers
Two sectors were primarily responsible for the surge in export earnings:
- Vehicles: up 23.6% year-on-year
- Precious metals: up 11.4% year-on-year
Precious metals have been supported by rising prices for gold and platinum group metals, which are expected to remain elevated due to ongoing geopolitical uncertainty.
Why this matters for property
Strong exports:
- Support jobs and incomes
- Improve economic confidence
- Strengthen the rand
- Reduce inflation pressure
All of these factors contribute to a more stable and supportive environment for the property market.
3. Strong Growth in Private Sector Capital Assets
Perhaps the most encouraging signal in Dr Botha’s data is the renewed confidence shown by the private sector.
For years, fixed capital investment was suppressed by:
- State capture
- Weak investor confidence
- Covid-19 lockdowns
But this has now changed.
A construction-led recovery
Private sector capital expenditure on buildings and construction works has rebounded strongly.
Between Q1 2024 and Q3 2025:
- Quarterly average investment reached R18.6 billion
- This is 85% higher than the average in 2022 and 2023
This recovery reflects growing confidence in long-term economic and property demand.
Why this is critical for the property economy
Construction is one of the most labour-intensive sectors in South Africa. Growth in this area:
- Creates jobs
- Supports housing supply
- Stimulates related industries
- Drives property transactions
Dr Botha notes that further interest rate cuts, combined with greater private sector involvement in logistics infrastructure, could significantly boost both economic growth and employment.
Conclusion: The Foundations for a Property Recovery Are Being Laid
The data is clear. South Africa’s economy is becoming more stable, more investable, and more supportive of growth.
With:
- A stronger rand
- A sustained trade surplus
- Rising private sector investment
- Falling inflation
- And the real prospect of lower interest rates
…the foundations for the next phase of the property market recovery are firmly in place.
As the Property Economy Series shows, the link between macroeconomics and home loans is real - and when the economy strengthens, property is one of the first sectors to benefit.