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South Africa’s residential property market is holding its ground despite the recent 25-basis-point increase in the prime lending rate to 10.5%, according to BetterBond’s June 2026 Property Brief. The data points to a market where the fundamentals remain sound even as affordability pressures mount.
The headline numbers tell an encouraging story for agents. Loan applications grew 7.6% year-on-year to May 2026, while the number of loans granted rose by 10% over the same period. The BetterBond Index of Home Loan Applications is 12% higher than in Q1 2020 and has increased by 12.5% since the low point following the rate-hiking cycle that began in November 2021.
Average home prices are also moving in the right direction. In Q2 2026, prices for first-time buyers (FTBs) grew 9% year-on-year, while the broader market recorded growth of 8.6% — both outpacing inflation, which came in at 4% YoY. The average purchase price for all buyers now exceeds R1.7 million, while FTBs average R1.4 million.
Buyer incomes continue to strengthen. At constant 2026 prices, the average monthly income of homebuyers has grown at an average annual rate of 10% in real terms since the post-COVID recovery, reaching R68,800 in Q1 2026. That growth rate of 5.9% year-on-year comfortably outpaces the 1.9% real increase recorded for formal-sector employees overall.
The affordable segment remains the engine of the market. Properties priced between R500,000 and R1 million account for 33% of all home loans granted in the 12 months to May 2026. However, the most notable shift in the loan mix is at the top end: the share of loans for homes priced above R3 million has grown by 20% since May 2024, suggesting that wealthier buyers are becoming a more significant force in the market.
Regionally, the Western Cape continues to lead. The average first-time buyer bond value in the province reached R1.6 million in the 12 months to May 2026, a 22% increase over two years. KwaZulu-Natal is gaining ground, with average FTB bond values up 14.5% since May 2024. Greater Pretoria holds the second highest average bond value nationally at R1.3 million.
The main headwind for agents to watch is deposits. Average deposit requirements for all buyers in Q2 2026 were 21% higher than a year ago, as banks moved to tighten lending criteria ahead of the rate increase. The blow is softer for first-time buyers, who faced a 7.3% increase in average deposit requirements, but rising upfront costs are likely to slow some buyers down.
The brief’s overall read is cautiously positive. Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond, notes that stronger household finances, rising home values and sustained buyer demand continue to support the market. The near-term risk is that higher borrowing costs and deposit requirements dampen momentum before the next rate-cutting cycle begins.
