BetterBond
The May BetterBond Property Brief reveals a noticeable shift in the home loan approval ratio between the country’s different regions, and while every region recorded an increase over the past four years, the Eastern Cape has now overtaken the Western Cape to assume the number one position with a ratio of 83.9%. Greater Pretoria has retained its number two position.
The month in numbers
- 2.2% YOY increase in the number of home loan applications
- R1.6 million – average house price for all buyers
- 20% real increase in average house price since 2019
- 2.2% YOY real increase in average home buyer income
BetterBond index of home loan applications
During the 12 months to April 2025, homebuying activity stabilised, mainly due to the three marginal declines in the prime lending rate between September 2024 and January 2025.
Compared to a year earlier, BetterBond’s latest 12-month index of home loan applications increased by 2.2% – a huge improvement on the decline of 15% that was recorded between the 12 months to April 2023 and April 2024. Record-high prime rates led to a declining trend in home loan applications that lasted for three successive years, but the switch to a slightly more accommodating monetary policy seems to have assisted in ending this downward cycle.
Since the end of the state capture era, a strong growth trend returned to homebuying activity, with the BetterBond home loan index increasing almost fourfold over the past eight years, despite the temporary slump induced by the Reserve Bank’s restrictive monetary policy between 2022 and the end of 2024. Any further relaxation of the monetary policy is bound to lead to an acceleration of property market activity – hopefully in May
Average home purchase price
A marginal YOY increase was recorded for the average home purchase price in April 2025, reaching a level of R1.6 million. This is 1.6% higher than the average for Q1 2025, with a fairly stable trend of just below R1.6 million having come to the fore over the past five quarters. It seems clear that the housing market has adopted a wait-and-see approach vis-à-vis the next interest rate cut, which may occur as soon as May.
The marginal decline in the average home price for first-time buyers (FTB) to R1.28 million could stimulate demand during 2025, especially due to the lower deposit requirement that has developed since mid-2024.
For all buyers, the latest average home price confirms the soundness of an investment in residential property, with a real increase of 20% in average home prices over the past six years. The shares of home loans allocated to higher priced houses have continued to increase over the past two years, with a 10% YOY increase for homes priced above R3 million over the past 12 months.
Average deposit for home purchase
In tandem with the most recent trend for average home prices, the average deposit required for all buyers also increased in April to R300,000 – marginally lower than the peak of R312,000 recorded in Q1 2024.
In contrast, FTBs have enjoyed a declining trend in the average deposit requirements for accessing home loans since Q2 2024, having dropped from R199,000 to R175,000 in April. The latter value is 8.9% lower than in April last year and is certainly a welcome development for the more affordable housing market segments.
Positive developments that could lead to further declines in deposit levels include the declines in credit impairments by banks and in civil debt defaults that occurred during Q4 2024.
Loan approval ratio by region (12 months to April 2021 and 2025)
For the 12 months ended April, the average loan application approval ratio for all regions stood at 77.5% – a modest increase from the 74.1% level four years ago.
In several regions, the increases have been more pronounced, with the Eastern Cape overtaking the Western Cape to assume the number one position with a ratio of 83.9%. Greater Pretoria has retained its number two position. The Eastern Cape has also recorded the highest gain since 2021, namely 10.2%. Any further lowering of the prime lending rate will almost certainly lead to further increases in approval ratios for home loan applications.
Read the full report here
