BetterBond Property Brief
Let’s start with the pudding before the meal – according to the June BetterBond Property Brief the average house price for all buyers reached a record high of R1.6 million, representing a YOY increase of 2.1%, slightly below the latest consumer price index of 2.8%.
The month in numbers
- 4% YOY increase in the number of home loan applications
- R1.6 million average house price in April and May Â
- 2.8% Consumer Price Index in April Â
- 8.4% Increase in share of home loans for houses priced above R3 million
BetterBond index of home loan applications
During the 12 months to May, homebuying activity improved marginally, with a YOY increase of 4% in the number of home loan applications. Any doubts over the negative effect of high interest rates on the residential property market are easily dispelled by taking a glance at the data on home loan applications.
 Following an explosive average annual growth trend of 77% in home loan applications for the 12-month periods between 2018 and 2021 (ending in May), the BetterBond index of home loan applications started a fairly sharp declining trend, due to the relentless rise in the prime rate to its highest level in 15 years. The index for the 12 months ending in May 2025 is now 34% lower than four years ago.
Fortunately, the monetary authorities resumed the rate-cutting cycle towards the end of May, which is bound to lead to an acceleration of property market activity during the second half of 2025. An exceptionally strong rand exchange rate is expected to aid the switch to a more accommodating monetary policy during the rest of 2025.
Average home purchase price
While the average house price has increased, it dropped by 0.8% for first-time buyers (FTBs), from the level achieved during Q1 2025. These trends confirm the continued presence of a buyer’s market for residential properties, especially against the background of declines of 4.6% and 7%, respectively, for real house prices since Q1 2022. During this period interest rates were marching towards a new record high, and the debt service costs as a percentage of household income moved rapidly from 6.7% to 9.1%.
Fortunately, the latter has started to decline and is now 8.9%, which has assisted with the stabilisation of homebuying activity. The decision by the monetary authorities to resume the rate-cutting cycle late in May is likely to lead to stronger growth in house prices during Q3 2025.
Average deposit for home purchase
One of the most encouraging features of the latest BetterBond home loan data is the declining trend for average deposits required for home loan approval. After briefly breaching the R300,000 mark for the average deposit required by all buyers since the end of 2023, this value dipped to an average of R285,000 for April and May 2025.
The news is even better for FTBs, with a decline from just below R200,000 a year ago to an average of R169,000 for the past two months. The YOY declines in the average deposits for all buyers and for FTBs are 6.7% and 14.8%, respectively – a most welcome development. These trends are in line with some of the findings of a recent BDO report on the South African banking sector, which found that banks are demonstrating effective credit risk management as evidenced by a deceleration in impairment growth.
Regional composition of home loans granted – all buyers (12 months to May 2025)
A significant gap exists between the average home loan value for FTBs and repeat buyers. For the country, this difference amounted to R483,000 during the 12 months ended May 2025.
Although the Western Cape has the highest average loan value for repeat buyers, at R1.96 million, FTBs in the suburbs of North-West Johannesburg enjoy the highest discount relative to repeat buyers, namely R620,000. Rather predictably, the Western Cape also has the highest average loan value for FTBs, namely just more than R1.4 million. Greater Pretoria is in second place, with an average value of R1.24 million, followed by Mpumalanga at R1.18 million.
As a rule, the average income of a first-time buyer is considerably lower than for the average repeat buyer, which serves as an explanation for these variances in home loan values.
Percentage share of formal grants per home price bracket (12 months to May 2025)
The record high interest rates of the past three years have exerted a more pronounced negative effect on lower income groups. Proof is provided by the fact that the share of home loans awarded to the three lowest home price groups (all below R1.5 million) have continued to decline, while the share of home loans for homes priced at more than R1.5 million have continued to increase.
In addition, an exponential effect is visible at both ends of the scale, with the top home price bracket (above R3 million) enjoying a YOY increase in its share of home loans awarded of 8.4% (during the 12 months ended May 2025). At the other end of the scale, the share of loans for homes priced at below R500,000 has diminished by 7.2%.
Read the full report here.
