Property market forecast: Trends to watch in 2025

2025 promises to be an exciting chapter for South Africa's property market. With interest rates expected to ease and innovation driving growth across all sectors, the market is brimming with potential for buyers, tenants, investors, and developers alike.

Experts at the Rawson Property Group are optimistic about the opportunities ahead, pointing to stabilising conditions and evolving trends that will shape the year. From unlocking the full potential of urban hubs to adapting to shifting tenant demands, 2025 is set to reward those who act strategically and embrace change.

Here's what to expect in the year ahead.

Residential Sales: A steadying market with growth potential
The residential property market is expected to stabilise in 2025, buoyed by gradual improvements in affordability and buyer confidence. David Jacobs, National Sales Manager for the Rawson Property Group, predicts a shift towards well-supported areas with strong infrastructure.

"Buyers are becoming more discerning, focusing on long-term value in areas with reliable municipal services," Jacobs explains. "Gauteng's growth potential is immense, but its full recovery depends on infrastructure improvements. Cape Town, meanwhile, continues to attract strong buyer interest."

While 2024 saw sluggish house price growth - just 0.8% year-on-year, the slowest in 15 years - Jacobs expects modest recovery as interest rate cuts provide relief. "This could be the year where affordability starts to align with opportunity, particularly for first-time buyers," he says.

Connectivity remains a top priority for buyers, reflecting a continued demand for fibre-ready homes over features like dedicated home offices. Jacobs also notes that reverse semigration from coastal areas to Gauteng could gain traction as inland affordability improves.

Residential Rentals: Meeting the demand for affordability
The rental market in 2025 is expected to grow steadily, driven by continued demand for affordable housing. Jacqui Savage, National Rentals Manager for the Rawson Property Group, sees a strong trend towards smaller units and shared housing solutions.

"Tenants are prioritising affordability, especially in light of rising living costs," Savage says. "We're seeing consistent demand for budget-friendly options in suburbs like Parow and Goodwood in Cape Town and Midrand in Gauteng."

Western Cape remains the strongest rental performer, with vacancy rates as low as 1.07% and rental growth at 9.3% year-on-year. In contrast, Gauteng's higher-end properties continue to face challenges with tenant retention.

Savage predicts rental price growth will moderate between 4 - 4.8% year-on-year, as inflation impacts tenant affordability. "Landlords who adapt to market demands with smaller, more affordable units will find success," she advises.

Property Finance: Affordability gains momentum
The property finance landscape in 2025 will benefit from further anticipated interest rate cuts, making homeownership more accessible and reducing the financial burden on bondholders. Leonard Kondowe, National Manager for Rawson Finance, encourages buyers to act strategically in this environment.

"Lower rates mean smaller monthly repayments, which could tip the scales for renters considering homeownership," Kondowe says. "It's also an excellent opportunity for existing bondholders to accelerate debt reduction."

Despite this positive outlook, Kondowe emphasises the importance of financial preparation. "Saving for a deposit and getting prequalified remain crucial," he advises. "A deposit not only improves your chances of approval but can also reduce your interest rate, creating significant long-term savings."

Commercial Property: Innovation drives growth
The commercial property sector in 2025 will continue to evolve, with technology and adaptability leading the charge. Craig Mott, National Business Development Manager for the Rawson Property Group, highlights key trends to watch.

"Smart building technologies, from energy-efficient systems to advanced security and IoT-driven management, are becoming essential for landlords and tenants alike," Mott explains. "These features enhance operational efficiency and tenant satisfaction, setting properties apart in a competitive market."

Industrial and logistics properties remain the sector's strongest performers, driven by sustained e-commerce growth. Gauteng and Cape Town lead the way in rental growth and low vacancy rates, reflecting robust demand for warehousing near transport hubs.

Mott also sees opportunities in adaptive reuse projects, such as converting underutilised retail spaces into mixed-use developments. "The ability to repurpose properties creatively will be a defining factor for success in 2025," he says.

Flexible workspaces will maintain their appeal as businesses refine hybrid work models. Suburban office spaces are gaining traction for their cost-effectiveness, though urban hubs remain vital for industries prioritising visibility and accessibility.

2025: A year of strategic opportunities
The South African property market in 2025 is set to reward those who adapt to evolving trends and make informed decisions. With stabilising conditions, another anticipated interest rate cut, and growing demand for innovation, the year ahead offers significant opportunities across all sectors.

"Whether you're buying, renting, or investing, preparation and adaptability will be the keys to success," Jacobs advises. 

https://www.property24.com/articles/property-market-forecast-trends-to-watch-in-2025/32537