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South Africa’s housing market is staying the course, with several indicators pointing to some improvement in affordability. While buyers still face higher deposit requirements and the possibility of renewed inflationary and interest rate pressures, home loan application data suggests the market is absorbing these challenges and sustaining activity, says BetterBond’s National Head of Sales, Bradd Bendall.
BetterBond’s latest (September) Property Brief shows that the Index of Home Loan Applications remained virtually unchanged during the first two months of the third quarter, following a marginal decline in the second quarter. “Notwithstanding May’s increase in the prime lending rate and the banks’ decision to increase their deposit requirements, home loan application volumes were still 11.3% higher in the third quarter than they were at the end of 2023,” says Bendall. “This means that buyers are still actively looking to engage in the property market by applying for bonds to finance their homes.”
Mixed affordability
Recent data provides a mixed view of buyer affordability. While the average price paid by first-time buyers has increased by 8% year-on-year, house-price-to-income ratios and deposit requirements have also improved. According to BetterBond’s latest Property Brief, the average first-time buyer house price now stands at R1.4 million; a nominal increase of 19% since the third quarter of 2023.
Across all buyers, average house prices have increased by 2.5% in real terms over the past three years. Nationally, prices rose by 5.9% over the past year, compared with 1.2% during the preceding 12-month period. Bendall adds that in addition to lower interest rates, the slow pace of new-home completions and growing supply deficit is helping to support this house-price growth.
However, longer-term income comparisons show improvements in affordability. For buyers aged between 41 and 50, the house-price-to-income ratio has fallen by 27% since 2021. This group now requires the equivalent of seven quarters of income to buy a home at the national average price, explains Dr Roelof Botha, Economic Advisor to BetterBond Home Loans.
Most age groups, apart from buyers aged between 21 and 30, also have lower house-price-to-income ratios than they did a decade ago, Botha adds. This suggests that homes may be relatively more affordable compared with incomes over the longer term, even though prices have risen in several segments of the market.
Deposits remain more manageable than they were two years ago. Despite the slight increase in July and August, the overall deposit requirement remains 7.3% lower than it was in 2024. “Unless interest rates rise again, it’s likely that deposit requirements will remain relatively stable for the rest of the year,” notes Botha.
Demand broadens
Housing demand is also showing signs of broadening beyond the higher-income segment of the market. Since interest rates started to come down, the pattern of house price growth across different income groups has shifted, says Bendall. Buyers earning less than R15 000 a month continue to record the strongest growth, with average house prices in this group increasing by 8.8% over the past year.
There has also been a notable increase among buyers earning between R15 000 and R25 000 a month. Average house prices for this group rose by 6.5% over the past year, making it the second-fastest growing income group, up from fifth place previously. Meanwhile, the highest income group, earning more than R55 000 a month, moved from second to third place. “Importantly, house prices for these three income groups have increased faster than inflation,” says Botha. Consumer price inflation was 4.3% in July.
While this may benefit existing homeowners, it could pose some affordability challenges for first-time buyers entering the market, says Bendall. “For these buyers in particular, working with a bond originator who can approach multiple banks may help them secure a more favourable lending rate and improve their chances of qualifying for a home loan.”
Regional markets take the lead
Regional trends are playing an increasingly important role in the housing market. The Western Cape and Greater Pretoria have widened the gap over much of the rest of the country, recording double-digit house-price growth over the past year. Average house prices in the Western Cape increased by 13.8%, while Greater Pretoria recorded growth of 11.5%.
Bendall attributes some of the demand in these regions to their strong education offering, from quality schools and extra-mural activities to tertiary education opportunities. Pretoria also benefits from its role as South Africa’s administrative capital, with government departments, foreign embassies and other institutions supporting demand. Mpumalanga has overtaken KwaZulu-Natal to take third place in terms of average house prices, with homes selling for an average of R1.67 million.
Employment trends are also impacting regional housing demand. Over the 12 months to June 2026, the Western Cape, Mpumalanga and KwaZulu-Natal recorded meaningful employment gains. The Western Cape was the standout performer, adding 91 000 jobs – almost the same number as the jobs lost in Gauteng over the period. Gauteng nevertheless remains South Africa’s largest employment hub, accounting for 30% of total national employment.
A market with room to grow
BetterBond’s latest data suggests that the property market remains on relatively firm footing, despite continued pressure on households. Home loan applications remain above 2023 levels, deposits are lower than they were two years ago, the relationship between house prices and incomes has improved for most age groups, and the home loan approval ratio has risen to 64.5%. “A strong rand and easing inflation pressures could give the Reserve Bank room to maintain or eventually relax monetary policy in the next few months, although this outlook remains dependent on interest rates, oil prices and broader global conditions,” says Bendall.
