BetterBond
The latest BetterBond Property Brief reveals that home loan applications rose by 9.3% year-on-year and 7.7% quarter-on-quarter in Q1 2025, showing a clear rebound in buyer activity. Gauteng remains the busiest province, accounting for 48% of all home loans granted over the past year.
The month in numbers
- 9.3% YOY increase in the number of home loan applications
- 3.1 YOY increase in the average home price for first-time buyers
- R185 000 – Average home loan deposit for first-time buyers
- 90% YOY increase in the value of building plans in Kwa-Zulu Natal
BetterBond index of home loan applications
The marginal improvement in homebuying activity that became evident in the first two months of the year gained some traction in March, with the BetterBond home loan index increasing by 7.7% QOQ and by 9.3% YOY during Q1 2025.
Home loan applications started a declining trend ever since the record high prime rates of the past three years started to bite but flattened out since mid-2023. Prior to the switch to a restrictive monetary policy, the BetterBond home loan index increased by an impressive 29% in the space of only 12 months (between Q1 2020 – prior to the Covid pandemic – and Q1 2022.
Despite the refusal of the Monetary Policy Committee (MPC) to lower the repo rate again during their March policy meeting, the residential property market seems poised to accelerate during the rest of the year. With inflation still at the bottom end of the Reserve Bank’s target range, a further interest rate cut may occur in May.
Average home purchase price
The marginally lower cost of servicing home loan debt has not yet translated into a meaningful return to positive growth in average home prices. Fortunately for first-time homebuyers, a YOY increase of 3.1% in average home prices during Q1 2025 managed to touch on the current consumer price index, which stood at 3.2% in February.
For all buyers, the YOY increase was merely 0.5%, but still better than the marginal decline recorded for the first two months of the year. Viewed from a five-year perspective, it is clear that an investment in a residential property still holds the promise of a store of value, although the age-old maxim of location first should be kept in mind.
Since Q1 2020 (prior to the Covid pandemic and the rise in interest rates to their highest level in 15 years), house prices have increased at an average annual rate of 5.7% for all buyers and 6.1% for first-time buyers – considerably higher than the current inflation rate of 3.2% and also higher than the dividend yield of 2.4% on Satrix (a proxy for listed companies on the JSE).
Average deposit for home purchase
In mid-2024, a temporary lowering occurred for the deposits required to access home loans by first-time buyers, but a rising trend has resumed since Q4 2024, albeit marginal. During Q1 2025, the average home loan deposit for first-time buyers amounted to R185,000, representing a QOQ increase of 1%.
Fortunately, the average deposit declined YOY by 5.1%. For all buyers, both the quarterly and annualised trends are in their favour, with declines of 2.2% and 4.9%, respectively. A positive development that could well lead to further declines in deposit levels is the decline of 1.8% in credit impairments by banks that occurred between October and December last year. Credit impairments had risen by 5.1% between December 2023 and October 2024
Regional composition of home loans granted – all buyers (12 months to Dec 2024)
During the 12 months to the end of March 2025, the number of loans granted to first-time homebuyers increased by 33% over the previous 12-month period. Johannesburg’s South-Eastern suburbs and the Western Cape retained their number one and two positions for the number of home loans granted to first-time buyers.
Gauteng remains the busiest province for residential property market transactions with 48% of the total loans granted over the past 12 months. Provinces that managed to enlarge their share of homebuying activity are Mpumalanga, Free State, the Northern Cape and North-West, at the expense of lower levels of home loans granted in Greater Pretoria, the Eastern Cape and Johannesburg’s North-Western suburbs.
Regions that house large metropolitan municipalities continue to account for the bulk of home loans granted to first-time buyers, namely 77% of the total.
Read the full report here
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