Is SA’s Housing Market On The Brink Of A Major Comeback?

“Homeowners and aspirant buyers have reason to be optimistic,” says Bradd Bendall, BetterBond’s National Head of Sales. “A combination of factors, including South Africa’s recent exit from the Financial Action Task Force (FATF) grey list after 30 months of reform and a strengthening rand, have created an ideal environment for market recovery.”

Data from BetterBond’s November Property Brief supports this view, showing a 30% increase in home loan applications since their 2023 low, with volumes reaching their highest levels in two years. “We are poised on a return to the level of activity seen before 2023.”

Several economic indicators reinforce the view that recovery is underway:

• S&P Global has maintained a positive outlook for South Africa’s local currency debt, with analysts anticipating a possible upgrade supported by reform progress and fiscal improvements.
• The 10-year bond yield has dropped by 225 basis points since April, reflecting improving investor sentiment and expectations of a more accommodative monetary policy stance.
• Manufacturing sales reached nearly R300 billion in August, the highest since late 2023, while wholesale sales are forecast to hit R1 trillion in Q4 2025, confirming renewed business activity.
• Foreign investment from the EU and development institutions is boosting energy and infrastructure projects.
• The Reserve Bank has announced a revised stronger forecast for real GDP growth of 1.8% between 2026 and 2028.

“Although rates remain about 50% higher than four years ago, the stabilising economy, improved investor confidence, and a downward trend in rates have created an environment supportive of further cuts,” says Bendall.

Prime lending rate trends since October 2021 – November BetterBond Property Brief

Cautious optimism

However, Bendall cautions that the Reserve Bank’s recent decision to anchor the inflation rate at 3% could prove disruptive, as it may lead to a more restrictive monetary policy and higher interest rates to keep spending in check. “The lower prime lending rate over the past few months has given homeowners welcome financial relief and encouraged more new buyers to enter the market,” he adds. “It is hoped that this accommodative approach will prevail in 2026.”

 A win-win for first-time buyers

Much of the recovery is being driven by first-time buyers, with loans in this segment up 17.4% year-on-year. This is a marked rise compared to just 3.3% between 2023 and 2024. Most of these applications come from Johannesburg’s south-eastern suburbs, while the Western Cape accounts for 16% of BetterBond’s first-time buyer activity.

Affordability for first-time buyers is improving as banks ease their lending criteria. The average deposit required for FTBs has dropped 21% since 2024, and 26% since the peak in Q2 2024, according to BetterBond’s data. “Lower deposit requirements and reduced borrowing costs are expected to further stimulate demand into 2026.”

Buyers’ market

The impact of higher interest rates in 2023 still lingers, with inflation-adjusted house prices slightly negative, notes Bendall. “However, the average purchase price for all buyers is holding steady at just above R1.6 million, while first-time buyers are spending an average of R1.27 million.” In real terms, prices have declined 2.1% since Q2 2023; a trend that favours buyers.

Encouragingly, homebuyer incomes have outpaced inflation across all age groups, with the largest gains among buyers aged 41 to 50 (up 22% since 2023). Bendall explains that the ratio between income and average house price shows that buyers aged 51 to 60 now have the highest affordability, able to repay a bond on an average-priced home for this age category in under two years.

Positive outlook

Further rate cuts are likely to reignite growth and restore the housing market to pre-2023 levels of activity, concludes Bendall.