Many South Africans cannot afford their homes

Financially pressured sales and life-stage downscaling were the two main reasons South Africans opted to sell their homes so far in 2025.

This indicates that financial pressures remain a significant motivator for South Africans to sell their properties, given the country’s high cost of living.

FNB’s latest Estate Agents Survey for the second quarter of 2025 reflected a mixed picture of South Africa’s residential property market.

The survey showed a slight cooling in the South African residential property market’s activity and sentiment in the second quarter compared to the first. 

FNB explained that while the country’s affordable housing segment continues to show resilience, overall momentum has softened, influenced by seasonal factors and heightened uncertainty. 

In addition, regional dynamics presented a mixed picture, with some areas seeing improved activity despite declining sentiment and vice versa.

For example, KwaZulu-Natal’s (KZN) market activity improved to 6.3 in the second quarter from 5.9 in Q1 2025. 

Despite this uptick in activity, agent sentiment in KZN experienced a marginal decline to 47% from 49% in Q1 2025, likely due to persistent infrastructure challenges weighing on overall confidence.

In contrast, the Western Cape saw its activity index at 5.9, a notable decline from 7.2 in the previous quarter. However, sentiment in the province remained remarkably stable at 67%, only a marginal decrease from 68% in Q1 2025.

The survey also provided insight into why South Africans chose to sell their homes during the second quarter of 2025, revealing a concerning trend.

FNB explained that financial pressures continue to be a significant motivation for selling property among South Africans.

The survey found that financially pressured sales accounted for 21% of sales, a marginal decrease from 22% in the first quarter, but still indicative of elevated levels of distressed selling.

Life-stage downscaling also remained a primary driver, accounting for 24% of sales, consistent with the previous quarter.

FNB said this highlights a steady flow of property transactions from retirees and those adjusting their living situations.

Other reasons for selling included emigration-related sales, which remained low at 5%, and upgrading activity, which was stable at 12% of sales.

The high ranking of financial distress as a reason to sell comes amidst the lowest interest rates South Africans have seen in two years.

The graph below shows the top reasons why South Africans at different price brackets sold their homes in the second quarter of 2025.

South Africans under pressure

Following years of hikes and unruly inflation, the Reserve Bank finally felt comfortable with the inflation outlook to implement its first interest rate cut in September 2024.

Since then, the central bank’s Monetary Policy Committee (MPC) has implemented 100 basis points of cuts, bringing the repo rate down to 7.25% and the prime lending rate to 10.75%.

The latest cut was announced at the MPC’s meeting on 29 May, in the second quarter of this year, when the committee voted to cut rates by 25 basis points.

Despite this and current low inflation, South Africans still listed financial distress as one of the main reasons for selling their homes in FNB’s survey, which shows the cost-of-living pressures households are under.

This is backed up by recent data about South Africans’ spending, which contributed to the country’s meagre economic growth outcome in the first quarter of this year.

Investec’s chief economist, Annabel Bishop, recently explained that inflationary pressure in South Africa is likely to remain modest due to weak demand.

The country’s household consumption expenditure (HCE), one of the key drivers of GDP growth, grew modestly by 0.4% in the first quarter of 2025.

Retail sales inflation – a key indicator of the cost of living and consumer purchasing power – also came out at a low 1.5% year-on-year in Q1 2025, well below CPI inflation.

This modest growth in HCE partly contributed to South Africa’s low GDP growth of 0.1% in the first quarter of 2025.