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While geopolitical tensions in the Middle East have contributed to the pause in South Africa’s rate-cutting cycle, data from BetterBond points to a residential property market that is steadily continuing its recovery, driven by improving affordability and renewed investor confidence.
Much of the current momentum is being fuelled by first-time buyers, who now account for more than a third of the bond market.
Market recovery gains momentum
“The recovery that started in 2024, when monetary policy started to ease, has now consolidated,” says Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond. According to BetterBond’s April Property Brief, home loan applications increased by 9.7% quarter-on-quarter during the first three months of this year.
“The year-on-year increase of 6.1% is equally impressive,” adds Potgieter. “It contributes to a significant 16% recovery rate over the past two years. Lower interest rates compared to the 15-year highs of 2023 have revitalised activity, leading to a total recovery in the BetterBond Home Loan Index of 21.8% since its low point in late 2023.”
Assurance amid uncertainty
A critical pillar of this recovery is the exceptional performance of South Africa’s financial institutions. The five largest financial companies on the JSE saw a massive 50% increase in equity value between April 2025 and February 2026. “This surge shows that investors have high confidence in the stability of South African banks,” explains Potgieter. “They are therefore more likely to offer competitive prime lending rates, consider 100% bonds and lower the barriers to entry for new buyers.”
A combination of improving economic growth, stronger investor confidence and lower interest rates last year has also contributed to a steady decline in average deposit requirements for home loans. The Reserve Bank has taken a cautious approach, opting to hold the prime lending rate steady amid global uncertainty. Fortunately, as noted by the Monetary Policy Committee at its March meeting, the country’s macroeconomic progress and steadier growth outlook suggest that inflation should revert to the 3% target within the next two years. This is good news for further rate cuts in the medium to long term.
Removing barriers for first-time buyers
An improved lending environment has allowed first-time buyers to become key drivers of market growth, commanding 38% of the loan market, up from 35.4% in 2023. While nominal house prices have hit record highs, averaging R1.35 million for first-time buyers and R1.67 million for the rest of the market, the recovery is being sustained by buyers who have some buffer against financial shocks.
BetterBond’s April Property Brief reports that homebuyer incomes have grown by 5.4% in real terms over the past four years, vastly outperforming the broader national economic average of just 0.3%. “This income growth allows the market to sustain higher bond values even as the prime lending rate remains on hold at 10.25%,” says Potgieter.
Increased property values
The data also reveals a widening regional divide, which Potgieter suggests could be linked to municipal performance. The Western Cape remains the top performer with an average bond value of R1.82 million, while Greater Pretoria, with an average of R1.4 million, has widened its value gap over Johannesburg’s north-western suburbs, which recorded increases of up to 4.4%.
However, the strength of the recovery is national in scope. “Over the past 12 months, every single region has averaged bond values of more than R1 million,” notes Potgieter. “This bodes well for a nationwide recovery, as it shows increased property values and bond activity extending well beyond the primary urban centres.”
Rise of compact living
One of the most significant shifts in the market is the move toward densification. While large homes still command the biggest overall market share, new building activity is moving toward smaller, more efficient units. In 2025, there was a 16.2% year-on-year increase in the value of completed homes smaller than 80 square metres, while the value of larger home completions dipped by 5.5%.
Simultaneously, new flats and townhouses saw a 27% increase in the value of completed units. These now account for over a third of the value of all residential buildings completed last year. “This reflects the growing demand for a secure, lock-up-and-go lifestyle,” says Potgieter. “Urbanisation and economic migration to Gauteng, the Western Cape and KwaZulu-Natal – which together account for 88% of all new construction – are accelerating the need for efficient land use.”
Looking ahead
While conditions remain supportive of a housing market recovery, sustained geopolitical tensions could slow the pace of further growth, adds Potgieter. One of the red flags, of course, is the impact of the conflict on oil prices. Already fuel prices have increased, with a knock-on effect that will be felt throughout the supply chain.
“However, economists remain hopeful that as domestic inflation (Consumer Price Index and the Producer Price Index) continues to stabilise, the rate-cutting cycle that began in 2024 will resume once the conflict eases, providing the push needed to move the market from a recovery phase into a period of stronger growth.”
