Business Confidence Rising - Positive Signals for South Africa’s Property Market
Several key economic indicators in South Africa have begun to show encouraging signs of recovery, suggesting that business sentiment is improving and economic momentum may be building.
According to economist Dr Roelof Botha, a number of important measures of business confidence have either recovered or started trending upward in recent months. These include:
The South African Reserve Bank’s leading business cycle indicator
The Business Confidence Index (BCI) compiled by the South African Chamber of Commerce and Industry (Sacci)
The S&P Global Purchasing Managers’ Index (PMI) for South Africa’s private sector
Together, these indicators provide a valuable snapshot of how businesses view the country’s economic outlook - and the trend is currently moving in a positive direction.
Business Confidence Continues to Improve
The Sacci Business Confidence Index has maintained strong upward momentum throughout 2025 and into early 2026.
In January 2026, the index reached an average level of 131.4, representing a 19% improvement compared to the first quarter of 2022, just before South Africa entered the sharp interest rate hiking cycle that pushed borrowing costs to their highest level in 15 years.
Since interest rates began declining toward the end of 2024, several economic indicators have started moving back into positive territory.
According to Sacci, the improvement in business confidence presents an important opportunity to convert positive sentiment into higher levels of fixed investment, which remains relatively low compared to global standards.
Further interest rate cuts, combined with faster implementation of reforms at municipal level, could play an important role in unlocking this investment potential.
Rand Strength Pauses Amid Global Tensions
While the domestic economic outlook has improved, global events continue to influence financial markets.
Historically, when geopolitical tensions escalate - particularly when the United States becomes involved in military conflict - global investors tend to move capital into traditional safe-haven assets such as:
The US dollar
The Swiss franc
Gold
Following the outbreak of war in Iran at the end of February, this pattern appears to have repeated itself.
Between 26 February and 6 March, the US dollar index strengthened significantly, placing pressure on emerging market currencies and bonds.
As a result, the South African rand weakened from R15.89 to R16.42 against the US dollar between 26 February and 5 March.
While a weaker rand can delay further interest rate cuts, it also has some positive implications. Exporters benefit from improved competitiveness, and international buyers may find South African property more attractive due to favourable exchange rates.
Vehicles and Precious Metals Drive Strong Trade Surplus
Concerns about global trade instability - particularly following tariff tensions initiated by US President Donald Trump - have not yet translated into negative outcomes for South Africa’s trade balance.
In fact, South Africa’s export performance is on track to reach a record annual high.
During the first eleven months of 2025, total exports reached R1.9 trillion, already exceeding the previous record set in 2023. This strong performance has resulted in a trade surplus of nearly R180 billion, helping to protect South Africa’s balance of payments and reducing pressure on the local currency.
Two export sectors have played a particularly important role in driving this growth:
Vehicle exports, which increased by 23.6% year-on-year
Precious metals, which rose by 11.4% year-on-year
Precious metal exports have benefited significantly from the surge in global prices for gold and platinum group metals, which tend to perform strongly during periods of geopolitical uncertainty.
With international tensions remaining elevated, these commodity prices are likely to remain firm — providing ongoing support to South Africa’s export earnings and broader economic stability.
Budget 2026 Receives Positive Response
Another development welcomed by the property sector has been the 2026/27 national budget.
In contrast to the previous year - when disagreements within the Government of National Unity over a proposed VAT increase led to delays in tabling the budget — this year’s budget process proceeded smoothly.
The real estate sector responded positively.
Stronger-than-expected corporate profits allowed National Treasury to record a revenue overrun of nearly R29 billion compared to the previous fiscal year’s budget.
This enabled the Minister of Finance to introduce several supportive measures, including:
Tax relief for individuals through adjustments to personal income tax brackets
A substantial increase in the VAT registration threshold for small businesses, rising from R1 million to R2.3 million
These measures provide meaningful support to both households and entrepreneurs.
Infrastructure Investment Remains a Priority
The 2026/27 budget also reaffirmed government’s commitment to improving the country’s infrastructure.
Key focus areas include:
Energy supply
Transport and logistics
Water infrastructure
In addition, the planned reform of the Municipal Infrastructure Grant is expected to improve infrastructure maintenance and service delivery at municipal level.
For property buyers and investors, reliable municipal services and infrastructure remain critical considerations when evaluating property markets.
Looking Ahead
While global events can still introduce short-term volatility, the improvement in business confidence and supportive fiscal measures suggest that the broader economic environment in South Africa may gradually strengthen.
For the property sector, these developments are encouraging.
Improved economic confidence, potential interest rate relief, and infrastructure investment all contribute to a more stable environment for home buyers, investors, and the broader real estate industry.
Property Economy Series with Dr Roelof Botha Shared by Phoenix Bonds — South Africa’s Home Loan Specialists