South Africa’s residential property market continues to show resilience despite mounting global risks, including the ongoing conflict in the Middle East, that could tighten financial conditions and slow the pace of recovery.According to FNB’s latest Property Barometer, house price growth moderated in April after a stronger-than-expected start to 2026, though underlying market fundamentals remain supported by constrained supply, improving affordability and sustained demand from higher-income households.The FNB House Price Index recorded annual growth of 5.4% in April, slightly lower than 5.7% in March, while monthly growth was flat. Despite the moderation, average price growth for the first four months of the year remains at 5.7%, comfortably above the inflation rate of 3.4%.FNB senior economist Kobe Philisiwe said the residential market recovery, which initially experienced an upswing through first-time buyers in 2021 before broadening to repeat buyers, is increasingly being driven by wealthier households benefiting from positive wealth effects.“The key question is how long this resilience can be sustained, given elevated inflation risks and the likelihood tighter financial conditions will weigh on real house price growth and soften demand,” Philisiwe said.The bank noted global geopolitical tensions, particularly the conflict in the Middle East, have begun to cloud the outlook by pushing up inflation expectations and tightening global financial conditions.Despite these pressures, FNB said the market enters this phase from a relatively strong base, driven by several structural and cyclical factors.Data from Stats SA shows residential building activity remains well below levels seen during the pre-global financial crisis boom of the early 2000s. While there was some recovery in building plans passed in the late 2010s, momentum was disrupted by the Covid-19 shock and has yet to fully recover.Higher construction costs, supply-chain constraints and subdued development activity have further limited new housing stock entering the market.Construction material costs remain more than 50 index points above 2019 levels, even though inflation in building materials has eased to 4.3% in March from peaks of nearly 18% in 2021.At the same time, improved sentiment toward South Africa and slower emigration trends have contributed to tighter supply, particularly in higher-value segments of the market.However, FNB cautioned aggregate supply data masks a shift in demand patterns, with a stronger appetite for sectional title units such as apartments and townhouses, reflected in increased building activity in these categories.Demographic changes and affordability pressures are also reshaping housing demand, particularly among younger buyers and middle-income households.Rental inflation has accelerated alongside the recovery in housing demand, with overall rental inflation rising to 4% in March, while apartment rental inflation reached 5.1%.Provincial trends are increasingly divergent, with Mpumalanga and the Western Cape recording stronger rental inflation, while Gauteng, Northern Cape and Free State remain below the national average.FNB said rising rental costs could play a greater role in household decisions around renting versus buying property.The bank said affordability has improved over the past decade due to real house price compression, alongside mortgage market innovations such as longer loan terms, group home loan structures and youth-focused lending products.While unemployment remains elevated and smaller businesses continue to face pressure from high operating costs, the report noted wage growth in select sectors, combined with improving policy certainty and ongoing structural reforms, could help support housing demand.FNB expects the residential property recovery to continue at a more moderate pace, with its durability likely to depend on the trajectory of inflation and interest rates over the medium term.