Renewed activity from first-time homebuyers in the last quarter of 2024 is an indication that the property market might be significantly more buoyant in 2025 compared to the past two years, home loans data from home loan comparison service, ooba, showed.
The data from 2020 to date showed a declining trend in home loan application activity due to the higher interest rate environment and economic uncertainty. Activity particularly dipped from the fourth quarter of 2022 after inflation surged, prompting a series of interest rate hikes by the South African Reserve Bank, which weakened the economy and weighed on household finances.
“Our fourth quarter data revealed a number of key trends pointing to the steady recovery of the property market, led by solid demand from the first-time homebuyer segment, along with a few interesting developments in homebuyer behaviour,” said ooba Group CEO Rhys Dyer.
In the second half of last year, there were two interest rate cuts, and price pressures eased, so house sales activity began to recover, rising by 15.2% from year-earlier levels during the final quarter of last year.
Richard Gray, CEO of Harcourts South Africa, said a recovering economy often stimulates property demand, making it an ideal environment for buyers and sellers.
“Interest rates are projected to stabilise, with the possibility of gradual reduction throughout 2025. This could lead to lower home loan rates, making home finance more affordable. Sellers may also benefit from increased buyer activity as more individuals enter the market. This trend will encourage first-time buyers and those looking to upgrade their homes,” said Gray.
“This recovery has been underpinned by improved business and consumer confidence, driven by factors such as the formation of the GNU (Government of National Unity) and the suspension of loadshedding,” said Dyer.
He said that the fourth quarter also saw a healthy increase in the average purchase price paid by first-time homebuyers, as well as the average approved bond size, which rose by 4.5% and 6.8% year-on-year, respectively.
On average, homebuyers were now spending more on homes than a year ago, up by 4.3% at R1 628 654.
Similarly, the average approved bond size increased by 5.6%, from R1.301m in the fourth quarter of 2023 to R1.375m in the same period in 2024, signalling a slight drop in the average deposit from 16.6% to 15.5%.
The Free State, the country’s most affordable housing market, recorded the highest ratio of first-time homebuyers in the fourth quarter, with 57.9% of home loan applications received from this segment, which is 12.1% higher than the national average, said Dyer.
He said today’s first-time homebuyer is making their foray into the property market later in life. “In 2014, the average age of first-time homebuyers was just under 34 years, while in the fourth quarter of 2024, their average age is 36.”
The strongest growth in house prcicing data was recorded in the Western Cape, followed by Limpopo: the only two regions in which house price growth exceeded the average consumer inflation rate of 4.4% last year.
Johannesburg was the only market to register negative growth in property prices, but monthly data showed house prices in the Johannesburg metro market are recovering and look set to yield growth in 2025,” said Dyer.
He also said that in 2024, 64% of first-time homebuyers did not have dependants, compared to 54% ten years ago. "The proportion of homebuyers without dependants has risen since the pandemic, a notable trend given these homebuyers are also becoming older.” Fourteen percent applied for a joint home loan, while in the fourth quarter this was 18%.
Compared to a low of 4% in 2014, 10% of first-time homebuyers were now also purchasing property for investment purposes. In addition, 60% of these transactions were for sectional title homes.
“With property prices in large cities becoming less affordable, ‘rentvestment’ is an appealing option for first-time homebuyers,” said Dyer.
“With a recovering economy, evolving buyer preferences, and technological advancements, the South African real estate market in 2025 promises to be dynamic and full of opportunities. Buyers and sellers who stay informed and adapt to these changes are more likely to succeed in their transactions,” said Gray.