Good news for South Africans selling their homes

South Africa’s residential property market appears to be recovering, with prices rising and the time to sell a home declining towards the end of 2024. 

This is feedback from the Reserve Bank’s latest Quarterly Bulletin, which outlined various trends in South Africa’s economy for the fourth quarter of 2024. 

One of the trends flagged was the continued recovery of the South African housing market, with data showing growth in house prices across the board. 

Although nominal residential property price growth remained subdued, the year-on-year rate of increase accelerated during 2024 and the opening months of 2025. 

This recovery has been primarily driven by interest rate cuts and lower headline inflation, translating into improved consumer confidence and buying activity. 

The year-on-year increase in Stats SA’s residential property price index accelerated to 4.1% in October 2024, the highest rate since August 2022. 

This improvement was echoed in the Lightstone house price index, which accelerated to 2.4% in February 2025. 

According to Stats SA and Lightstone, growth in the prices of both sectional title and freehold properties accelerated, with a stronger increase recorded in freehold properties. 

Year-on-year growth in the FNB house price index accelerated slightly from mid-2024 to 1.4% in February 2025.

However, when releasing its index, FNB explained that on an inflation-adjusted basis, its index is still in negative territory. 

FNB economist Siphamandla Mkhwanazi pointed out that the recovery was not as strong as initially expected after several interest rate cuts from the Reserve Bank.

Mortgage lending conditions have shown a modest improvement, with the average loan-to-value ratio rising to 95.1% in the fourth quarter of 2024. 

This signals cautious optimism among lenders and buyers as banks gradually loosen lending standards in response to an improving economic backdrop.

Interest rates remain higher than their pre-pandemic levels. They are significantly elevated compared to the period the House Price Index was last in positive territory on an inflation-adjusted basis. 

Elevated interest rates subdue buying and selling activity in the residential property market and significantly increase households’ debt-servicing costs.

Demand for property is rising

The Reserve Bank’s data pointed to further good news for homeowners looking to sell their property as demand continues to rise. 

It said that the recent acceleration in nominal house price growth coincided with an increase in the Residential Property Demand Index, indicating that the increased demand for housing continued into 2025. 

Furthermore, the time that residential properties remained on the market declined from an average of 12.2 weeks in the second quarter to 11 weeks in the fourth quarter.

However, this does remain very sensitive to interest rates, which remain elevated compared to pre-pandemic levels. 

Despite this, South African homeowners are the most confident they have been in a decade about the future of residential property. 

This was revealed by Absa’s Homeowner Sentiment Index (HSI), which hit 87% in the fourth quarter of 2024. 

The index tracks over 1,000 consumers after it was broadened in 2023 to include smaller provinces in South Africa and gain insights regarding the uptake of alternative power solutions. 

Absa’s report revealed that aside from a surge in confidence, the dominance of first-time buyers in the market relative to other segments is an ongoing trend.

“This result bodes well for the outlook of the property market into 2025 and is indicative of the resilience of South African consumers,” the managing executive of Absa Home Loans, Nondumiso Ncapai, said.

Sentiment to buy and invest in the property returned strong results in Q4 2024, while confidence to sell surpassed the 50% mark after trailing below this midpoint for the last two years.

Buyer sentiment improved to 77% in Q4 2024 from 73% in the previous quarter and has been on an upward trajectory since the second quarter of 2023.