28/05/2026
A must read article by Richard Gray Harcourts CEO
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A rate hike is painful, but it may be part of getting the economy back to normal
By Richard Gray, CEO of Harcourts South Africa
Today’s interest rate increase will be disappointing for homeowners and buyers. There is no point pretending otherwise. For families with home loans, even a small increase can make the monthly budget tighter. For first-time buyers, it may mean qualifying for slightly less than they hoped. For landlords, tenants and sellers, it adds another layer of caution to an already careful market.
But while the immediate reaction is understandable, we also need to look at the bigger picture.
This is not simply about one monthly bond repayment. A rate hike is usually a signal that the Reserve Bank is responding to pressure in the wider system. In plain language, the Bank is not only looking at what prices are doing today. It is asking whether those price pressures are likely to stick around.
That is the part many people miss.
If petrol goes up for one month and then comes back down, households feel the pain but the economy can absorb it. If transport costs, food costs, wage demands and business costs all begin feeding into one another, then inflation becomes harder to control. That is when the problem
becomes systemic. It moves from one price shock to a broader cost-of-living problem.
In that sense, today’s hike should be seen as a reaction to pressures that are not being treated as temporary. It is a difficult medicine, but the aim is to stop inflation from becoming part of everyday expectations. Once people and businesses start assuming that everything will keep getting more expensive, it becomes much harder to return to normal.
There is also an important counterpoint. The rand has shown signs of strength and oil prices have come down from recent highs. Those are helpful developments for South Africa, especially because fuel prices filter into almost everything, from groceries to building materials to transport. The fact that these pressures are easing suggests there is an active effort, globally and locally, to move conditions back towards normal.
That does not make today’s decision easy. But it does suggest the hike should not be read as a vote of no confidence in South African households. Rather, it is part of a broader attempt to protect the value of money and create a more stable environment over time.
For the residential property market, the impact will be practical. Some buyers will need to recalculate their affordability. Some will reduce their price range. Others may pause until they feel more comfortable. Sellers will need to be realistic, because buyers are already thinking carefully about monthly repayments, levies, rates, insurance and transport costs.
However, this does not mean the property market stops.
People still get married, have children, relocate, downsize, start new jobs, move closer to schools and look for safer, more practical homes. Residential real estate is not driven only by interest rates. It is driven by life. What changes in a rate hike environment is not the need for property, but the way people approach the decision.
The everyday buyer should not panic, but they should be honest. Do not buy at the very edge of your affordability. Leave room for maintenance, municipal costs and life’s surprises. A home should be a place of security, not a monthly source of fear.
For homeowners, this is a good time to review spending, speak to the bank early if under pressure, and avoid short-term decisions that create long-term damage. Selling under pressure without proper advice can be costly. So can ignoring the problem until it becomes urgent.
For sellers, the right price matters more than ever. A serious buyer in a higher-rate environment is still a valuable buyer, but they will not overpay simply because a seller is hoping for yesterday’s market.
At Harcourts, we believe the best response to uncertainty is clarity. Understand your numbers. Get proper advice. Make decisions based on your own circumstances, not only on the headline.
A rate hike is never good news for the monthly budget. But if it helps prevent deeper, longer-lasting inflation, it may also help create the conditions for a healthier property market later. The goal is not just lower rates. The goal is a normal, stable economy where South Africans can plan, buy, sell and build their lives with confidence.
