SA’s residential property market has entered a period of cautious optimism, with early signs of stabilisation emerging, despite lingering headwinds from years of high interest rates and sluggish economic growth.
According to bond originator BetterBond’s July property brief, home loan applications rose 7.4% in the second quarter of 2025 compared with a year ago, despite slower homebuying activity.
“The residential property market still has a long way to go before breaching the levels of activity experienced at the beginning of 2021 — prior to the monetary policy committee (MPC) embarking on a restrictive policy approach that saw the prime rate climb to a 15-year high,” reads the brief.
After reaching a record high of R1.3m in the first quarter, the average house price for first-time buyers dipped slightly to R1.28m in the second quarter.
The overall average house price now stands at R1.58m. Since early 2022, real house prices have declined by 6.4% for all buyers and 8.3% for first-time buyers, reflecting the ongoing effect of the interest rate hikes that began in 2021.
However, with the debt service cost as a share of household income falling slightly from 9.1% in 2024 to 8.9%, affordability is slowly improving.
Regionally, activity varied. Pretoria recorded the biggest jump in home loans granted, up 26.7%, supported by its strong industrial and academic base.
The Western Cape and Johannesburg’s south-eastern suburbs also performed well. The Western Cape recorded a 14.7% year-on-year increase in home loans granted, with the province also boasting the highest average home price in the country at R2.1m. Johannesburg’s south-eastern suburbs accounted for the largest share of home loans granted nationally, at 22%.
The Eastern Cape and Mpumalanga saw a drop in loan volumes, while Gauteng’s building activity dropped 20%, likely due to ongoing service delivery issues.
The North West showed potential for growth in property activity after a 60% surge in the platinum price since the start of the year. The region also recorded a 10% increase in average home prices, despite having some of the lowest prices in the country.
Looking ahead, BetterBond expects that with inflation still low and the prime lending rate at 10.75%, the stage is set for a potential interest rate cut by the MPC at the end of July, which could further boost affordability and encourage more buyers to enter the market.
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