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The March BetterBond Property Brief reveals that the average deposit required for home purchases declined by 4.2% quarter-on-quarter and 6.8% year-on-year, making homeownership more accessible. There is further good news in that while overall home prices declined by 0.5% year-on-year, first-time buyers saw a 2.5% year-on-year increase, indicating demand remains strong in this segment.
The month in numbers
- 6.7% QOQ increase in the number of home loan applications
- R1.3 million average house price for first-time buyers
- 8.2% YOY increase in total home loans granted
- R2.1 million average house price in the Western Cape
BetterBond index of home loan applications
The first two months of 2025 witnessed a meaningful improvement in homebuying activity, with the BetterBond home loan index increasing by 6.7% QOQ and by 8.3% YOY. This uptick is most welcome and follows a sideways pattern that lasted for the seven prior quarters.
No doubt the latest 25 basis points drop in the repo rate has played its part in a mild stimulation of residential property market activity. The prime lending rate now stands at 11%, which is still a full percentage point higher than just before the Covid pandemic, suggesting that considerable leeway exists for further rate cuts in 2025. The number of home loan applications during January and February was virtually on par with Q4 2020 (pre-Covid), but still 23.6% lower than three years ago, just before the relentless rise in interest rates started to bite.
Average home purchase price
Since September 2024, the prime lending rate has declined by 25 basis points three times, but the marginally lower cost of servicing home loan debt has yet to filter through to a more egalitarian supply and demand environment. This is confirmed by the YOY decline of 0.5% and QOQ decline of 1.8% in average house prices during Q1 2025.
For first-time buyers, the situation is different, with a YOY increase of 2.5% in average house prices as well as a marginal QOQ increase. Despite the relatively subdued level of activity induced by record high interest rates, investing in residential property remains attractive, with house prices having increased at an average annual rate of 5.5% for all buyers and 6% for first-time buyers over the past five years – considerably higher than the current inflation rate of 3.2% and also higher than the dividend yield of 2.4% on Satrix (a proxy for listed companies on the JSE).
Average deposit for home purchase
The temporary lowering of the deposits required for access to home loans in Q3 of 2024 resumed during Q1 of 2025. If this trend is sustained, it is good news for prospective homebuyers, as a higher deposit requirement by the banks acts as a barrier to entering the housing market. During January and February 2025, deposits for all buyers declined by 4.2% QOQ and by an even larger margin YOY, namely 6.8%.
For first-time buyers, the average deposit requirement increased marginally QOQ, but also declined YOY, from R183,000 to R190,000. Significantly, the gap between deposits for all buyers and first-time buyers also declined during Q1 2025 to a level of exactly R100,000, which is 16% lower than the all-time high recorded in Q4 2024.
Regional composition of home loans granted – all buyers (12 months to Dec 2024)
During the 12 months to the end of February 2025, Johannesburg’s South-Eastern suburbs have witnessed a substantial increase in homebuying activity, consolidating the position as the top region for the number of home loans granted.
Six of the nine regions analysed by BetterBond recorded increases in the number of home loans granted, with the Free State & Northern Cape (combined) recording the highest YOY gain, namely 29%. In the process, this region has moved up one notch in the rankings, at the expense of the North West. KwaZulu-Natal and the Western Cape recorded the second and third largest YOY increases in home loans granted, at 16.5% and 16.2%, respectively. In total, 8.2% more home loans were granted during the 12 months to February 2025 than in the previous 12-month period.
Read the full report here.
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