SA’s property market is turning a corner

Jani le Roux

24 March 2025

MAIN IMAGE: Brad Bendall – BetterBond national head of sales

BetterBond

South Africa’s residential property market has turned a corner, and 2025 could well be the year for your buyers to invest in a new home, says Bradd Bendall, BetterBond‘s national head of sales. An analysis by BetterBond reveals an improvement in nearly all key indicators of housing market activity. This comes after the slowdown in 2023, when sustained high prime lending rates muted buyer activity.

Bond applications up

The most encouraging improvement in the past year has been the return to positive growth for the number of home loans granted, says Bendall. There has also been a 7.5% year-on-year increase in home loan applications. Furthermore, building loan application volumes have also improved considerably, up over 5% year on year.

“While the North West, Eastern Cape and Johannesburg North West regions have still not recovered from the period of sustained high interest rates when it comes to the volume of home loans granted, the significant increases in homebuying activity in the other provinces confirms that the property market is rebounding,” says Bendall. The Free State and Northern Cape, Western Cape, KwaZulu-Natal, Johannesburg South East and Pretoria recorded double-digit growth during the past 12 months.

Positive house price growth

Average home prices have increased by 4.7% year on year, as reported in BetterBond’s February Property Brief. This echoes the findings of the latest FNB House Price Index which show that house price inflation has recorded its highest growth rate since 2023. FNB notes that this upward trend suggests “improving buyer sentiment, supported by easing financial pressures and evolving lending conditions”.

Affordability boosts demand

The demand for homes has strengthened in recent months and has resulted in shorter selling times. As noted in FNB’s Q4 2024 Residential Property Barometer, homes are now spending on average only 11 weeks on the market, with homes in the R2.6 million to R3.6 million price band moving even more quickly. The average time on the market for these homes has dropped to nine weeks, especially in sought-after coastal areas in the Western Cape and KwaZulu-Natal.

Improved average income

An indicator that bodes well for the continued strengthening of the property market is the improvement in the average income earned by prospective homebuyers. During the 12 months ending January 2025, the increase in average income for all buyers hit double digits at 10.5%. First-time buyer incomes have also increased, which when coupled with the lower interest rate, suggests that affordability for this segment of the market should improve this year.

Bonds for homes of below R1 million represented 42% of all the home loans awarded by BetterBond for the 12 months up to the end of January this year, says Bendall. “This is substantially lower than it was before the pandemic of 2020. Over the past six years, this share has dropped by 29%. Hopefully, increased income coupled with lower interest rates will reignite buying activity in this important segment of the housing market.”

First-time buying activity

Furthermore, FNB reports in its 4Q24 Estate Agents Survey that first-time buyer activity increased from 20% to 25% of all market transactions. “Although still lower than pre-2022 trends, this upward shift suggests that there is a gradual recovery in activity by first-time buyers following consecutive interest rate cuts.”

Bendall points out that although these improvements are not evenly spread around the country, collectively they do point to a property market in recovery and on track to thrive. “With annual consumer price inflation still at the lower end of the Reserve Bank’s target, we are hopeful for further cuts in the prime lending rate in the next few months. This should invigorate buyer activity throughout the market and encourage more first-time buyers to invest in property.”