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Impact of Potential South African Reserve Bank Interest Rate Increase on the Rental Market

The South African real estate market, particularly the rental sector, has experienced its fair share of fluctuations in recent years. One of the factors that significantly influences the rental market is the interest rates set by the South African Reserve Bank (SARB). In this article, we will examine the potential impact of a looming interest rate increase by the SARB on the rental market, with the goal of attracting more properties for rent.

Understanding the Relationship between Interest Rates and the Rental Market:

Interest rates have a direct impact on the cost of borrowing, which affects the affordability and demand for housing. When interest rates rise, it becomes more expensive for individuals to take out home loans, which can result in a decrease in the number of potential homebuyers. As a result, some individuals may opt to rent instead of buying a property, leading to increased demand in the rental market.

Increased Rental Demand:

If the SARB decides to increase interest rates, potential homebuyers may face higher borrowing costs, making homeownership less accessible. This scenario can stimulate the demand for rental properties as individuals may choose to postpone buying a home and opt for renting as a more affordable alternative. Landlords and property owners could benefit from this increased demand, as it creates opportunities to attract more tenants and potentially secure higher rental yields.

Rental Price Adjustments:

As demand for rental properties rises, landlords may have more flexibility in adjusting rental prices. However, it’s important to note that rental prices are also influenced by various other factors such as location, property condition, and market conditions. Landlords should carefully consider the prevailing rental rates in their specific area and make adjustments accordingly to ensure competitiveness while maximizing rental income.

Supply and Property Investment:

The potential increase in rental demand could also spur property investors to enter the market, seeking opportunities for rental property acquisitions. As rental yields become more attractive, investors may be motivated to expand their property portfolios, leading to an increase in the supply of rental properties. This can benefit both tenants and landlords, as a broader selection of rental options becomes available.


While the possibility of a South African Reserve Bank interest rate increase remains uncertain, it is essential for real estate professionals and investors to stay informed and monitor market developments. Should interest rates rise, the rental market could experience increased demand, presenting opportunities for property owners and investors to attract tenants and expand their portfolios. However, it’s important to consider other market factors and maintain a balanced approach to rental pricing to ensure long-term success in the dynamic real estate landscape.


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Taryn Retief
Rentals Manager