SARB Hikes Repo Rate to 7.25%: What It Means for the Pretoria East Rental Market
The SARB raised the repo rate by 25 basis points to 7.25% in September, lifting prime to 10.75%. We look at what higher borrowing costs and cooling rental growth mean for Pretoria East Landlords, Tenants and investors.
The South African Reserve Bank's Monetary Policy Committee raised the repo rate by twenty-five basis points to 7.25% on 23 September 2026, taking the prime lending rate to 10.75%. The decision follows a hold at 7.00% in July and reverses the more accommodative path many in the property sector had expected. For Landlords and Tenants across Pretoria East, Centurion and Midrand, the increase changes the arithmetic on both sides of the rental relationship.
What the MPC Decided, and Why
The Committee pointed to a difficult global backdrop rather than domestic overheating. Escalation of the Middle East conflict and continued disruption to Russian and Ukrainian refinery capacity have produced what the Bank called a large and persistent global supply shock, pushing up fuel-price and inflation risk. Reserve Bank Governor Lesetja Kganyago described the move as a measured response taken in conditions of high uncertainty, with the Bank remaining focused on its price-stability mandate. Industry commentators were divided on whether the hike was strictly necessary given easing domestic inflation, but agreed that its effect on borrowing costs is immediate.
The Effect on Monthly Bond Repayments
A quarter-point increase is modest in isolation, but it compounds an already higher base. Approximate increases in monthly repayments are:
- R 1 000 000 bond: repayments rise by around R 168 a month
- R 2 000 000 bond: repayments rise by around R 335 a month
- R 3 000 000 bond: repayments rise by around R 500 a month
For Landlords carrying a bond on a rental property, this adds directly to holding costs. For prospective buyers, it narrows the affordability margin at exactly the price point where first-time buyers tend to compete, which in turn keeps demand in the rental pool rather than shifting it into ownership.
What It Means for Pretoria East Landlords
A Landlord's own bond costs are only part of the picture. The more relevant question is whether rental income can still cover a higher repayment without an aggressive increase at renewal. Kingsmark's view is that realistic, market-tested rent-setting matters more than ever in this environment.
- Review bond repayments against current rental income before the next Lease Agreement renewal, rather than assuming last year's rent still clears the higher instalment
- Budget for a slower pace of rental growth than headline national figures suggest, since Gauteng has consistently trailed the national average over the past year
- Maintain thorough Tenant vetting. As affordability tightens for households generally, credit and affordability checks carry more weight, not less, in protecting rental income
- Keep compliance current, including a valid Property Practitioners Act Mandatory Disclosure Document and up-to-date electrical and gas certificates, since higher rates tend to bring more scrutiny of costs on all sides of a Lease Agreement
What It Means for Pretoria East Tenants
For Tenants, the rate decision does not translate into an automatic rent increase. Rent is set by Landlords at renewal or on a new Lease Agreement, and increases still have to be affordable to the household paying them. What has changed is the wider backdrop: higher rates make buying less attainable for many first-time buyers, which tends to keep demand for good rental stock firm even as household budgets tighten elsewhere.
Tenants renewing a Lease Agreement in the coming months should budget for an increase broadly in line with recent trends rather than a sharp jump, and should raise affordability concerns with their Landlord or managing agent early rather than after signing.
Rental Growth Is Cooling, Even With Rates Rising
National rental growth accelerated through the first half of 2026, from 4.7% in April to 5.6% in June, according to PayProp's Rental Index, taking year-on-year growth to 5.2% and the national average rent to R 9 715. Gauteng grew more modestly at 4.4% year-on-year, with an average rent of R 9 646, almost matching KwaZulu-Natal's R 9 657. Seven of nine provinces underperformed the national average in that quarter, with the Western Cape leading at 9.7% and the North West the only other province ahead of the national figure at 7.8%.
This follows a weaker patch at the end of 2025, when Gauteng recorded year-on-year growth of only 3.2% and national monthly increases slowed to between 4.3% and 4.8%, the softest pace since March 2024. PayProp's Michelle Dickens has noted that household budgets remain under real pressure, with net pay growth of only around one percent a year against rental growth that has narrowed toward the inflation rate. Read together with September's rate hike, the picture for Pretoria East is one of continued, but disciplined, rental demand rather than sharp escalation in either direction.
Kingsmark's View
Higher borrowing costs and cooling rental growth are pulling in different directions for Landlords, but both point to the same discipline: price rental stock on current market evidence, not on last year's growth rate, and keep vetting and compliance tight while affordability is under pressure. For Tenants, the message is similarly practical. Rental demand in Pretoria East remains firm because buying has become harder, not because supply is scarce, so well-priced, well-maintained homes still let quickly.
The Reserve Bank's next Monetary Policy Committee meeting will be watched closely for whether this hike proves to be a single adjustment or the start of a further tightening cycle. Kingsmark will continue to track the data relevant to Pretoria East, Centurion and Midrand as it is published.
Landlords requiring professional assistance and guidance, and Tenants planning a move in Pretoria East, are welcome to contact the Kingsmark team.