Where first-time homebuyers are finding better affordability in South Africa

Where one buys their property can have a significant impact on both their affordability and the cost of entering the property market.

Although the recent interest rate increase has pushed up monthly bond repayments, there is encouraging news for first-time homebuyers.

Lower deposit requirements, supportive lending conditions and stronger earning power are helping to keep homeownership within reach, says Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond.

Significant regional differences in both pricing and deposit requirements

While affordability is improving nationally, the recent BetterBond’s Property Brief highlights significant regional differences in both pricing and deposit requirements.

The Western Cape continues to outperform the rest of the country, recording average house price growth of 13% over the past year to reach R2.4 million.

This is an impressive performance considering the province’s already high price base. First-time buyers are also spending more, paying an average of R1.9 million for a home – a 14% increase year on year – reflecting sustained demand despite higher prices.

The province ranked third nationally for home loans granted to first-time buyers.

In Gauteng, the market appears to be stabilising. Johannesburg's South-Eastern suburbs recorded a 2.9% increase in home loans granted to first-time buyers, retaining the top position among BetterBond's regions.

The neighbouring North-Western suburbs experienced only a marginal decline while remaining in second place.

Affordability has also improved in parts of Gauteng, with the average deposit required from all buyers falling by 15% in Pretoria and Johannesburg North West. In Johannesburg's South-Eastern suburbs, first-time buyers are putting down deposits that are 13% lower than a year ago, reducing the upfront costs of entering the market.

Several other provinces have also become more accessible over the past year

Several other provinces have also become more accessible over the past year.

Average deposit requirements have fallen by 56% in Limpopo, 22% in the Eastern Cape, 10% in KwaZulu-Natal and 9% in Mpumalanga, suggesting buyers in these regions need less upfront capital to secure a home loan.

Affordability pressures still facing new entrants to the market

The Northern Cape presents a contrasting picture. While bond approvals have increased by 19%, relatively few of these loans have gone to first-time buyers.

At the same time, first-time buyers are facing deposits that are 78% higher than a year ago, despite average deposits for all buyers declining by 62%, highlighting the affordability pressures still facing new entrants to the market.

Stronger incomes underpin the market's resilience

One of the key reasons first-time buyers have remained resilient is improving earning power. As reflected in the July Property Brief, affordability ultimately depends on income.

Over the past four years, the average salary earned by first-time homebuyers has increased by 15.5% in real terms, significantly outperforming the 2.8% growth recorded across the formal economy.

Today, first-time buyers earn, on average, 64% more than the average formal sector employee.

Earning power has helped many first-time buyers absorb higher borrowing costs and rising property prices

"This is a boon for the property market, as this stronger earning power has helped many first-time buyers absorb higher borrowing costs and rising property prices, supporting continued demand for homeownership," says Potgieter.

"While sluggish economic growth has meant that salary growth has only marginally outpaced inflation since 2021, the overall upward trend in incomes has provided an important cushion for aspiring homeowners navigating a higher interest rate environment."

Gradually strengthening economy supports improved affordability 

Improved affordability is being supported by a gradually strengthening economy, with GDP growing by 1.4% year on year during the first quarter of 2026.

As economist Dr Roelof Botha notes in BetterBond's Property Brief, "In contrast to the nervous socio-political milieu, June provided an impressive array of good news on the economics front, most notably in the form of lower fuel prices."

He expects the recent rise in inflation to reverse as food inflation eases, reducing the likelihood of further interest rate increases.

Taken together, data from BetterBond's latest Property Brief suggests that while higher interest rates continue to test affordability, lower deposit requirements, stronger incomes and resilient buyer demand are creating fresh opportunities for first-time buyers. 

According to GetGo Home Loans, SA's latest GDP figures paint a mixed picture for the property sector.

It said that while non-residential investment is showing encouraging growth, residential investment remains under pressure, highlighting the ongoing challenges around housing delivery and affordability. 

For Property Practitioners and buyers alike, it said understanding these broader economic trends is essential when making property decisions.

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