Good news for South African homeowners
South Africa’s property market is bouncing back. After a three-year decline, home loan activity has picked up so far in 2024.
This was revealed in BetterBond’s Property Brief for October, in which the company outlined the reasons behind the market’s rebound.
The South African residential property market has been under immense pressure in the past few years, with elevated interest rates and the rising cost of living preventing many from buying homes.
Many first-time buyers also burnt their fingers by buying property when interest rates were cut during the Covid-19 pandemic as the Reserve Bank tried to support the economy.
When inflation rose sharply towards the end of 2021 and throughout 2022, the bank raised interest rates to the highest level in 15 years.
Beginning in November 2021, the Reserve Bank hiked interest rates by a cumulative 475 basis points. This made the monthly repayments on a R1.5 million home loan R4,600 more expensive.
Standard Bank’s home loan data showed a sharp drop in activity as the Reserve Bank raised interest rates.
In 2019, the market was registering an average of R14 billion in home loans a month. This surged to around R20 billion a month as interest rates were cut in 2020.
As interest rates climbed, the market fell back to an average of R14 billion in home loans a month in 2023.
This trend has continued into 2024 with further muted levels. The bank said this can be attributed to fewer application volumes due to affordability constraints and low consumer confidence levels.
Many South African homeowners simply could not afford to make the monthly repayments on their properties in early 2024.
South Africa’s banking regulator, the Prudential Authority, said its data showed defaults on home loans have risen 36% year-on-year so far in 2024.

Bouncing back
BetterBond’s index tracking home loan activity indicates the tide is turning in the South African residential property market.
The index began 2024 with a modest recovery as wealthier buyers returned to the market and the possibility of interest rate cuts increased.
This recovery has accelerated as the year continued, with renewed optimism in the local economy and the beginning of an interest rate-cutting cycle boosting activity.
The number of home loan applications increased by 4.5% in the third quarter compared to the second quarter and by a more modest 1.6% compared to the same period last year.
BetterBond said the decline in the average home purchase price has also slowed as more buyers return to the market.
South Africa’s large home loan financier, Standard Bank, also said it is seeing signs of a turnaround in the residential market.
Historically, the residential property market has always shown resilience and recovery after significant downturns.
It also said South Africa’s political landscape has stabilised quicker than many expected after the elections at the end of May.
Coupled with a stronger currency, there is potential for renewed economic stability, which will boost consumer confidence.
However, BetterBond urged caution in expecting any significant improvement in the short term as interest rates remain historically high.
Prospective homeowners have been confronted by the highest prime lending rate in 14 years, which is not conducive to any meaningful expansion of residential property market activity.
As a result, the number of home loan applications has declined by 31% since the Reserve Bank began hiking interest rates at the end of 2021.
During the two years prior to this period, home loan activity was brimming, with an increase in loan applications of 43%.
The company said that even though interest rates have started a downward cycle, 2025 could still be a bumper year for the home loan industry.
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