One group of homes very popular in South Africa

South Africans are ploughing into affordable housing, with demand for properties priced between R350,000 and R700,000 surging in the past few years. 

This is feedback from Standard Bank, which said it has seen a double-digit increase in activity in this market segment in the past four years. 

The bank explained that this surge is primarily due to increased urbanisation, which drives demand for more accessible housing in major metropolitan areas. 

“This segment continues to show resilience, particularly in Gauteng and the Western Cape, where demand remains strong despite economic pressures,” said Standard Bank home services head, Toni Anderson. 

This segment is dominated by households earning up to R30,000 a month, and these properties are typically their first. 

While the uptake of sectional title homes has more than doubled in the past four years compared to the four years leading up to 2020, most buyers still prefer full-title, standalone houses. 

“These are likely to be on the outskirts of key metros, but strong sales suggest buyers are willing to make that trade-off for full-title homes,” Anderson said.

Geographically, while provinces like KwaZulu-Natal and the North West have also seen rapid growth in home loan uptake for affordable housing, Gauteng leads the market. 

In the four years up to February 2025, Gauteng accounted for 47% of all affordable housing loans issued by Standard Bank – a pattern that persisted even before the pandemic. 

However, the demand for affordable housing extends beyond traditional markets. Despite rising house prices, the Western Cape has remained active in the affordable housing market – a trend it has consistently shared with Gauteng. 

Over the four years leading up to February 2025, the Western Cape accounted for 18% of all affordable housing loans issued by Standard Bank, with KwaZulu-Natal following in third place at 12%.

“When you look at the Western Cape and Gauteng, you see significant private sector investment in affordable housing projects and urban development,” Anderson said. 

“This has spurred growth and created more opportunities for first-time home buyers who typically look at this price range.” 

Anderson adds that the strong performance of the Western Cape and KwaZulu-Natal aligns with their status as two of the top three provinces for first-time home buyers.

First step on the property ladder

Anderson explained that for many, this is their first step on the property ladder, with these types of homes being the first purchased outright by South Africans. 

This is important for South Africans to build household wealth and opens up significant opportunities to earn extra income. 

Many Standard Bank customers take out only one affordable housing loan, Anderson said, but a growing subset is also accessing additional funds. 

Much of these additional funds are used for home improvements or expansions, indicating that these purchases serve as entry points into the housing market for buyers with bigger aspirations. 

This trend is even more prevalent among wealthier homeowners, with those earning more than R50,000 a month investing heavily in their properties. 

These individuals tend to use the additional funds to construct multiple units on a single property that are then rented out. 

“These owners typically don’t plan to sell and prefer not to sectionalise due to time and cost,” Anderson said. 

Another growing trend is converting properties into multi-tenanted dwellings for rental income. However, banks avoid lending for such projects due to zoning issues and inadequate infrastructure for the number of tenants.

“What we’re seeing is that many of our clients are taking a different approach to wealth creation than what we’ve traditionally been accustomed to,” the head of personal and private banking at Standard Bank South Africa, Chiko Manokore, said. 

“However, many are focused on short-term income generation but need to consider the long-term implications.” 

Building multiple units without sectional titles may seem costly now, but it could save headaches in the future as market conditions and personal circumstances can change quickly. 

For example, many investors who build larger homes for rental income often face the need to downsize as they approach retirement. 

They may encounter unexpected financial setbacks and be forced to sell quickly, often at a loss.