Tyson Properties advises property owners to keep a watching brief throughout 2026
- Dylan Naidoo
- 12 hours ago
- 4 min read
By: Tyson Properties
Right now, South Africa is entering an extremely interesting time for the property sector. Whether buying or selling the family home or snapping up a bargain buy for rental, those expecting to make substantial investments in property need to be aware of some key potential policy shifts as they move on to or even further up the so-called property ladder, advises Tyson Properties founder and CEO, Chris Tyson.
He has identified three key areas as potential game changers:
1. Scrapping the prime rate:
Reserve Bank governor Lesetja Kganyago’s announcement in Davos that it was looking into scrapping or restructuring the prime lending rate in order to modernise the financial system suggests a major realignment which is encouraging but probably less cataclysmic than the uninitiated might think.
In short, the announcement surrounding the longevity of the prime rate did not stipulate the timing and talks to an ongoing investigation that could take a year or more.
The prime rate – which is 10.25% following an interest rate cut in November last year – has been the benchmark for the rate that banks offer clients since 2001, reflecting the addition of a standard 3.5% to the base rate offered by the central bank. When applying for a home loan, clients are offered a rate that centres on the prime rate and is then adjusted depending on the cost of funding, risk appetite and creditworthiness.
“Doing away with the prime rate will increase competition for loans between lenders and see banks offering more market related options to potential clients. This comes at a time when there is evidence of greater demand for home loans as well as greater enthusiasm on the part of financial institutions to lend.
However, in itself, scrapping the prime rate will not materially impact the cost of existing debt. Instead, banks will compete more for loan business using more market related and transparent prices going forward,” he says.
Tyson warns that this will however put pressure on consumers to closely guard their credit health – bearing in mind that, on a R2-million bond, banks pocket at least R300 000 for every 1% in additional interest that they charge. With banks already under the watchful eye of the Competition Commission for alleged potential price fixing, the role of credit risk and the cost of lending will play a greater role in negotiations with lenders going forward and pave the way for better deals for first time borrowers. For those already paying off a mortgage, little is likely to change.
2. The inflation factor
Tyson adds that, what is potentially even more significant in the shorter term is how the Reserve Bank’s new 3% inflation goal beds down during 2026 as this will determine further interest rate cuts throughout the rest of the year.
“It is this that will revive the market and give both existing and new homeowners ongoing relief. Towards the end of last year, inflation edged above the Reserve Bank’s 3% new target which explains the pause in interest rate cuts at the beginning of the year. If all goes well, inflation is expected to level off during the latter half of 2026 sparking at least two further cuts,” he says.
However, even this entails some crystal ball gazing and, if the positive factors that have lent government some leeway on reducing debt and improving fiscal governance lose their edge, there’s the possibility of inflation inching upwards and out of the range for further relief.
Increased geopolitical and trade tensions could drive something like the oil price higher – with an obvious negative impact on inflation and household disposable income. For this reason, Tyson always advises buyers to create a contingency fund or buffer when setting affordable mortgage repayments.
Work on a worst-case scenario and save by either by overpaying your bond when times are good or by paying the required amount and using the remainder to build up a savings fund on the side for tougher time, he advises.
3. Local government leverage
With the local government elections looming and pressure building on municipalities to get their houses in order, this will have important consequences for property owners, according to Tyson.
The most obvious implication is that property values are closely impacted by local authorities’ abilities to provide services and ensure the health of local infrastructure. Constant outages – especially when it comes to water – tend to put downward pressure on property prices, leaving the better performing municipalities in the Western Cape leading the charge in this area.
However, President Cyril Ramaphosa’s announcement during SONA that a white paper that will look at the structure of local authorities and potentially eliminate small dysfunctional authorities that have neither the funding nor the skills to meet their obligations is just months away and could be a game changer.
The same goes for the ongoing drive to ring fence revenues so that, instead of putting ratepayers’ payments into a single pot for general usage, specific payments will go to the relevant areas. So, for example, water revenue will be used for upgrading and maintaining only water related infrastructure – a move that will yield positive outcomes in this department.
The flip side, however, is that all households need to factor in rates, electricity and water service increases when determining affordability. See these as part of your bond and budget for the year-on-year, Tyson suggests.
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