Best news for South Africa’s property market in a decade

South Africa’s property market is experiencing a surge, with consumer confidence at its highest level in a decade.

This is according to Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, who said the company’s recent uptick in enquiries about new house purchases echoes the data from Absa’s latest Homeowner Sentiment Index.

The report, which surveyed over 1,200 income-earning participants from metropolitan areas, cities, and towns, revealed that sentiment climbed to 87% in the final quarter of 2024.

This marks a significant milestone for the housing market, with growth recorded across all six key metrics measured by the index.

Geffen attributed this surge in confidence to the enduring appeal of home ownership.

“The data clearly shows that South Africans are increasingly viewing property as a solid investment and a cornerstone of financial security.”

“The belief that owning a home is more beneficial than renting has driven 77% of Absa’s respondents to express confidence in buying rather than renting, up 4% from the previous quarter.”

Lightstone’s 2024 data also highlighted positives.

While the overall volume of sales last year was marginally down in 2023 – a difference of less than 9,000 transactions – the combined value of the properties sold rose by some R3 billion.

Across the board, the average residential property price was just under R1.5 million.

According to Lightstone, Western Cape property led the race in 2024, as it has done for several years. This province accounted for the top 27 spots in the country with more than 10 sales of above R10 million recorded during the year.

Geffen says Lightstone’s first-time buyer statistics reflected Absa’s research.

“Nearly 50% of first-time buyers were aged between 30 and 45, while buyers in the 18 to 30 age group accounted for 14%.”

“Most encouraging is that there were more first-time buyers under the age of 45 than there were repeat buyers, meaning South Africans are serious about getting onto the property ladder.”

Unfortunately, this positive sentiment is juxtaposed against a troubling backdrop of rising consumer debt.

DebtBusters’ Q4 2024 figures reveal that South Africans are allocating an alarming 68% of their take-home pay to service debt – the highest level since 2017.

For higher earners taking home more than R35,000 per month, the situation is even more dire, with 74% of their income going toward debt repayment.

Geffen warned that this trend could have far-reaching implications.

“While the property market is thriving, the high debt-to-income ratios among consumers are a cause for concern.”

“Many South Africans are supplementing stagnant incomes with unsecured debt, such as personal and payday loans, which are, on average, 29% higher than in 2016. For higher earners, unsecured debt is 60% higher.”

The data also highlighted a stark decline in disposable income. In real terms, most South Africans had 42% less disposable income in 2024 compared to 2016, largely due to the impact of high inflation.

This has left many households financially vulnerable, with the lowest earners experiencing their highest debt-to-income ratio in nine years.

Homeowners were also hoping for another repo rate drop this month, which did not materialise.

Despite these challenges, Geffen noted that she remains optimistic about the resilience of the property market.

“Real estate has consistently proven to be a safe harbour investment, even in uncertain economic times.”

“The current surge in buyer confidence underscores the enduring value of property as a long-term asset.”

“For those who can navigate the financial landscape wisely, investing in real estate remains one of the most reliable ways to build wealth and secure a stable future.”

As South Africa’s property market continues to flourish, the message is clear: consumer debt levels are a pressing concern, but the allure of homeownership and the stability of real estate investment remain undiminished.

For those who can manage their finances prudently, property offers a beacon of hope and security in an otherwise challenging economic environment.

“The current economic climate may feel uncertain, but it is precisely in times like these that the value of real estate as a tangible, enduring asset class becomes even more apparent.”

“Bricks and mortar are not just physical structures; they are symbols of permanence, security, and opportunity,” Geffen noted.

Geffen added that property has long been a refuge for investors seeking stability in turbulent times.

“Unlike more volatile asset classes, real estate offers a unique combination of capital preservation, income generation, and long-term appreciation.”

“This isn’t news to real estate professionals, but it is massively encouraging to see data, such as Absa’s survey, showing that consumers are on the same page and are increasingly bullish about buying.”

“Even as interest rates and inflation fluctuate, the intrinsic value of well-located, well-managed properties endures, and the market understands this appeal.”