It is becoming more difficult to own a house in South Africa

South Africa’s residential property market is becoming increasingly unaffordable for younger buyers, with rising home prices, limited access to finance, and a struggling affordable housing segment.

According to Lightone, the shifts appear structural rather than cyclical, suggesting policy intervention is needed to change the trend.

Lightstone’s analysis of bond financing data confirmed the conventional wisdom of the residential market – bond activity increases as interest rates decline, and rising prices push bond values higher.

It also highlighted ongoing shifts in the under-35 market and financing challenges in the affordable market, despite a 2025 recovery in the proportion of transactions financed through bonds.

Lightstone’s managing executive of real estate, Hayley Ivins-Downes, explained that South Africa operates within a dual housing finance landscape.

On one hand, there is the formal, mortgage-led banking system that predominantly serves the middle- to upper-income market. On the other hand, there is the informal or semi-formal housing economy, which operates within the affordable segment.

In this market, Ivins-Downes said mortgage penetration remains limited, and access to housing is often driven by cash transactions, family structures, and community-based social networks

These affordable housing micro-markets are critical to South Africa’s future growth and stability. Individuals under the age of 35 account for more than 60% of the country’s estimated 63 million population.

The majority of South Africans are either actively participating in or aspiring to access the affordable housing market.

In general terms, it is a good sign for South Africa’s residential property market if these micro-markets are in good health, as they are the gateway for home ownership.

As expected, Lightstone’s data on the bond market from 2011 to 2025 confirmed a correlation between single-property primary bonds and interest rates. Typically, the number of bonds issued increases as interest rates drop.

“The number of bonded transfers between 2011 and 2025 has been flat at best, with the last three years (2023 to 2025) performing least well,” Ivins-Downes said.

“There were encouraging signs in 2025 as bonded transfers increased to 118,000 from a 15-year low of 110,000 in 2024.”

Lighstone reported that the increased value of primary bonds issued also affected the total value of primary bonds written over the years, and the post-Covid years of 2021 and 2022 stand out for the spike.

The total value of bonds issued in 2025 was R188.3 billion, down from the 15-year high of R221.2 billion in 2022.

The graph below shows the incremental yearly growth in the value of primary bonds issued since 2011, up from R800,000 in 2011 to R1.6 million in 2025, not adjusted for inflation.

Fewer young buyers are entering the property market

Lighstone found that buyers under 35 accounted for 31% of the bond value in 2025, down from a peak of around 40% in 2005.

This is before the global financial crisis (GFC) of 2008/9 took its toll on economies and property markets worldwide.

After the GFC, mortgage lending fell and never fully recovered in real terms. Even though lending volumes stabilised, the under-35 share of the market declined as tighter credit and affordability constraints intensified.

While the low proportion of bonded buyers under 35 is a concern, Lighstone explained that the issue is nuanced.

Younger buyers make up a third of transactions and are entering the market later. In part, this might suggest later access rather than disengagement.

However, it remains problematic because delayed homeownership reduces lifetime wealth accumulation and signals structural barriers, such as income insecurity, high interest rates, and unemployment.

In addition, the flatlining of bonded transfers over 15 years in a market with a growing population suggests something more than delayed access.

As expected, Lighstone found the middle and senior age bands – 46 to 55, 56 to 65 and >65 – account for the largest proportion of secondary bonds and bond switching. Buyers under 35 were the least active.

Affordable versus middle-upper level market

First-time-buyer (FTB) transactions fell in both the affordable segment, which accounts for more than 50% of properties registered at the Deeds Office, and the middle-upper segment over the five years between 2021 and 2025.

“The number of transactions in affordable FTB fell from 32,000 in 2021 to 22,000 in 2025, a 32% drop,” Ivins-Downes said.

“The proportion of bonded transactions, however, remained within the 30% yto 40% band, and in 2025 was at 38%, which translated into 8,360 units.”

The number of transactions in the middle-upper market FTB also fell, from 77,000 in 2021 to 57,000 in 2025, but, in percentage terms, was slightly lower than affordable FTBs at 26%.

The proportion of bonded transactions fell from 2021 to 2024, before jumping to 6% of transactions in 2025, which translated into 38 760 bonded transactions.

Repeat buyers also declined in both categories, while non-person transactions increased in the middle-upper-level category.

The data shows a clear split between the affordable and middle-upper market segments. Affordable housing relies more on constrained or informal financing, serves older buyers, and is limited by credit access.

Meanwhile, middle-upper-level housing is more formal, more mortgage-driven, and is under pressure from higher interest rates.

Lighstone clarified that the decline in young, bonded buyers is not uniform. The strongest decline is in the affordable segment.

That category already had low participation, and this has worsened due to unemployment and credit marginalisation. The decline is less severe in the middle-class market, where activity is partially offset by delayed entry.

Lighstone said that the real issue is not just “fewer young buyers” but that the fastest-growing housing segment (affordable) is the least financed.

This leads to stunted mortgage-market growth, limited wealth creation among lower-income groups, and persistent inequality in asset ownership.