The SARB's September Rate Decision and the Pretoria East Rental Market

Understanding the Current Interest Rate Cycle

The South African Reserve Bank's Monetary Policy Committee (MPC) raised the repo rate by 25 basis points, from 6.75% to 7.00%, in May, taking prime lending to 10.50%. In July, the Committee held the rate at that level on a split 4-2 vote, with two members favouring a further 25 basis point increase.

The Committee's next statement is due on 23 September 2026. The figures behind that meeting are worth understanding whether you own, let, or rent property in Pretoria East, Centurion, or Midrand.

Why Inflation Has Put the Committee on Alert

Statistics South Africa recorded consumer inflation of 5.0% for June 2026, up from 4.5% in May and the highest reading since June 2024. Transport was the largest contributor to the increase, with fuel prices up 34.3% year on year as diesel and petrol costs climbed sharply. That was the backdrop to the Committee's July decision.

Inflation has since eased. On 19 August, Statistics South Africa reported that consumer inflation cooled to 4.3% in July, the first decline in five months.

This matters because the Reserve Bank has narrowed its inflation target to a 3% point, rather than the midpoint of the previous 3% to 6% band. Even after July's decline, inflation sits 1.3 percentage points above that goal.

The Committee has described current policy as only "somewhat restrictive" relative to the neutral rate. With two of its six members already voting for an increase in July, a rate hike at the September meeting remains a real possibility.

The Medium-Term Mortgage Outlook

It is worth setting this against the medium-term picture. Average effective mortgage rates fell from around 11.2% in late 2024 to below 9.6% earlier in this cycle, easing monthly repayments on a typical bond by more than R 1 400.

The May increase, and the possibility of a further increase in September, represents a partial reversal of that relief rather than a return to the significantly higher rates seen through 2023 and 2024.

What a Further Hike Would Mean Locally

Should the Committee raise the repo rate by a further 25 basis points in September, prime lending would move to 10.75%. On a bond of R 1 500 000, that translates into a monthly repayment increase of roughly R 253.

For Landlords carrying finance on rental stock in nodes such as Garsfontein, Faerie Glen, and Equestria, this is a direct cost pressure unless it has already been factored into rental pricing.

For Tenants weighing up whether to buy or continue renting, a "higher-for-longer" rate environment tends to push that decision toward renting for longer. This keeps demand for well-located, well-priced rental stock firm even as affordability tightens across the board.

The Rental Market Beneath the Rate Story

Independent of the interest rate cycle, the rental fundamentals in Gauteng remain supportive for Landlords. TPN's outlook for 2026 points to residential rental escalations of between 4.5% and 5.5% for the year, driven primarily by a persistent shortage of rental stock.

The PayProp Rental Index showed Gauteng rental growth improving to 3.0% year on year in the third quarter of last year. This improvement returned Gauteng to third place nationally for rental growth, behind KwaZulu-Natal.

On the sales side, Property24 data on Pretoria East shows the entry-level segment remains active:

• Average asking price: R 1 850 000
• Average sale price: R 1 580 000
• Primary buyers: Those aged 18 to 35 (nearly one-third of purchasers) and empty-nesters downsizing.
• Key features: Security, low maintenance, backup utilities, and pet-friendly policies.

Practical Steps for Property Stakeholders

The Reserve Bank's decision on 23 September will shape the borrowing costs, rental pricing, and buying decisions our clients are weighing right now. We suggest the following focus areas:

• For Landlords: Build a possible further 25 basis point move into cash flow planning. Keep annual escalations realistic and maintain thorough TPN and credit vetting as living costs rise.
• For Tenants: Budget for the possibility that prime could reach 10.75% before year-end. Treat a well-priced rental in an established node as sound value while buying conditions remain tight.
• For Investors: The combination of a stock shortage and steady rental growth continues to favour buy-to-let property in Pretoria East and Centurion over speculative purchases further afield.

If you would like a clear, data-led view of how the current rate environment affects your specific property, whether you are letting, buying, or selling, speak to the Kingsmark team about managed rentals and sales in your area.