South Africa’s property market under pressure

Although South Africa’s property market remains resilient, economic pressures are shaping key trends in how consumers buy and sell homes.

This is according to Lew Geffen Sotheby’s International Realty CEO Yael Geffen, who recently pointed out worrying trends in the local property market.

Geffen said the residential property market remains a cornerstone of economic stability, serving as a safe haven in uncertain times.

However, data shows that the market continues to reflect economic uncertainty, with realism, affordability, and shifting demographics shaping the landscape.

While nominal house price growth has shown improvement, it remains uncertain whether this signals a proper recovery.

“Our economic landscape is too volatile to call this a definitive upturn. Global factors, like potential Trump tariffs, rand instability, and revised growth forecasts, mean we must watch this space closely,” Geffen warned.

According to FNB, the average time homes spent on the market improved slightly in Q4 2024, dipping to 11 weeks from 11.2 weeks in Q3.

However, by Q1 2025, this figure had edged up again to 12 weeks and one day. While still below the long-term average of 13 weeks, this fluctuation suggests cautious optimism rather than sustained momentum.

Geffen said economic pressure is a key factor driving the market. In Q4 2024, 26% of sellers cited financial strain as their primary reason for selling. This is a 3% increase from the previous quarter and well above the 19% average since 2007.

This has led to more realistic asking prices, though for many, these adjustments are less a choice and more a necessity. Geffen explained that with economic headwinds persisting, many homeowners decide to downsize.

For many consumers, “own what you can afford” has become a guiding principle, with buyers prioritising prudence over aspirational purchases.

Rentals, semigration, and first-time buyers

Economic pressures are also driving trends in the rental market. Rental inflation continues to outpace consumer inflation, compounding financial pressure on lower-income households.

However, this isn’t happening in isolation. Soaring electricity costs, rising transport expenses, and food price hikes, all exacerbated by a weak rand, are forcing tenants to rethink their options.

Many are aggressively saving for property deposits, and Payprop data shows rental growth stabilising between 4.5% and 5%.

Since a larger deposit increases the chances of securing a favourable bond, more South Africans are adopting this strategy to escape the rental trap.

Economic pressures have even started impacting South Africa’s semigration trend, which has been a staple of the country’s property market for years.

Geffen said the Western Cape’s consistent rental growth and low vacancy rates offer a blueprint for other provinces.

“Good governance and efficient service delivery attract investment and residents. When people see their rates payments translating into tangible improvements, demand follows,” she said.

However, semigration trends are evolving. While the Western Cape remains a top destination, soaring prices in Cape Town’s metro push buyers toward more affordable inland options.

Reverse semigration, and even reverse emigration, are gaining traction as returnees seek value and stability in South Africa’s comparatively affordable property market.

Positively, though, Lightstone’s data revealed that nearly 50% of first-time buyers are aged between 30 and 45, while those under 30 account for 14%.

“Encouragingly, there are now more first-time buyers under 45 than repeat buyers – a sign that South Africans remain committed to homeownership despite economic challenges,” Geffen said.

She added that amid these challenges, opportunities remain for those willing to adapt, research, and invest wisely.