MAIN IMAGE: Rhys Dyer – CEO of the ooba Group
ooba Home Loans
Home purchase prices are rising, and so are applicants’ income. The latest data from ooba Home Loans (Jan ‘25 – May ’25) highlights positive year-on-year growth in the average monthly gross income per home loan applicant across five of the nine regional housing regions.
Of the top-performing regions, Tshwane registered the strongest year-on-year growth in average monthly gross income, up 16.8% to R78,099, followed by the Eastern Cape, up 9.5% at R73,052 per month.
Conversely, the Western Cape, which continues to record the highest average gross income per applicant at R82,797 during the first five months of the year, registered a modest decline of 2.3% from the same period in the prior year.
“Nationally, there was a 2.4% year-on-year increase in the average gross earnings of home loan applicants, with the average national gross income pinned at R68,039,” adds Rhys Dyer, CEO of the ooba Group.
Source: ooba Home Loans
Income-to-purchase price ratios unpacked
The affordability of housing is often measured by comparing house prices to household income. “A lower ratio generally indicates greater affordability, as the household could potentially afford a larger portion of the home’s price with their income.”
Dyer highlights key insights into the house price-to-income ratios across regions for the period of January to May 2025 as follows: “In the Western Cape, the price-to-income ratio stood at 28.6, meaning that homes cost nearly 29 times the average gross monthly income of an applicant applying for the home loan,” he explains.
“This was followed by KwaZulu-Natal (24.8), the Eastern Cape (24.7), Johannesburg (24.5) and the Free State (23.3) – major regions that have seen a slight decline in affordability over the period,” says Dyer.
Conversely, there have been marked improvements in affordability and accessibility in the Tshwane, Gauteng South & East and Mpumalanga, as the average gross income per applicant has increased at a faster pace than the average purchase price.
Source: ooba Home Loans
Unpacking average home loan repayments to income ratios
“In terms of affordability as measured by the home loan repayment as a percentage of monthly gross income, Limpopo ranked as the most affordable region by a notable margin of 2.3 percentage points – at 17.9%,” says Dyer, pointing to monthly instalment of R13,142 on the average approved bond size of R1,294 535 and an average gross income of R73,371 (for the period Jan – May ‘25).
This was followed by Gauteng South & East, Tshwane and Mpumalanga, with home loan repayments accounting for 20.3% of applicants’ gross income.
In Johannesburg, where the average purchase price and average gross income are lower than in Tshwane but higher than in Gauteng South & East, the average home loan repayment accounts for a marginally higher 21.4% of gross applicants’ income.
Dyer notes that the Western Cape recorded the highest instalment-to-income ratio at 23.3%. “This is largely driven by the province’s significantly higher average purchase prices and bond sizes,” he explains, adding that over the period, the Western Cape registered the highest average home loan amount of R1,901,806.
Source: ooba Home Loans
Where homebuyers are oldest, and youngest
Dyer shares that the Eastern Cape was home to the oldest average at 42 years old (Jan – May ’25). “It’s likely that a portion of these purchases are holiday homes, which tend to be acquired by more mature, financially secure buyers and are typically higher in value,” he says.
Limpopo’s first-time homebuyers ranked oldest at 37.4 years over the period while first-time homebuyers in the Western Cape ranked the youngest – averaging just 34.2 years – a notable finding given the province also records the highest average first-time homebuyer purchase price at R1.75 million over the same period.
“A thriving buy-to-let market in the region may be reinforcing this trend as younger homebuyers look to invest early and spend more with the aim of capitalising on the Western Cape’s rental market and building generational wealth,” says Dyer, adding that investment demand accounts for 30.5% of all applications received from Jan – May ‘25, more than double that of the national average (at 12.6%).
The youngest average homebuyers reside in Gauteng South & East (38.8 years), with the region offering the second most affordable homes on average, aligned with the second lowest monthly gross income at R53,655.
To conclude, Dyer believes that the data shared – along with another 25-basis points interest rate reduction in late-May 2025 – paints an encouraging picture for what’s ahead. “The interplay between income growth, purchase price trends and regional buyer profiles, coupled with a quick succession of interest rate cuts, underscores the potential for broader recovery and the transformation in the property sector; one that presents greater opportunities for buyers across the country.”
