Lower interest rates have boosted home-buying activity, with the BetterBond Home Loan Index up 21.8% since the low point in the fourth quarter of 2023.
South Africa’s residential property market is showing signs of recovery, with home loan applications rising and buyer activity gradually improving, thanks to declining deposit requirements, among other factors.
Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond, said lower inflation and a steady interest-rate environment have supported the property market’s recovery, alongside declining deposit requirements and rising real incomes among homebuyers.
But he highlighted that ongoing geopolitical tensions in the Middle East continue to drive market volatility, putting pressure on fuel prices and delaying further rate cuts.
“Against this backdrop, the latest BetterBond Property Brief examines key housing trends, shifting buyer dynamics and the sustainability of the market’s recovery in an uncertain global environment.”
A decline in deposit requirements
The BetterBond Property Brief noted that there has been a consistent decline since mid-2024 in average deposit requirements for accessing home loans.
This has been caused by a fortuitous combination of enhanced investor confidence in the country’s banks, marginally higher economic growth and, more recently, by lower interest rates, according to the Property Brief.
“A solid financial performance by the country’s major banks has witnessed a healthy increase in the sector’s price/earnings ratio (for banks listed on the JSE), while the Financial 15 sector experienced an increase of 50% in equity value between the beginning of April 2025 and the end of February 2026,” reads the brief.
Middle East war threatens property recovery
The BetterBond Property Brief further highlights that the Middle East war has taken a toll on the sector; however, its equity value remains 36% higher than a year ago.
Lower interest rates have also helped reduce the ratio of credit impairments to bank assets, with the average deposit requirement for first-time buyers declining by 26.6% since the first quarter of 2024.
According to the property brief, home loan applications continued to trend along the recovery path during the first quarter of 2026.
“The quarter-on-quarter increase in the BetterBond Home Loan Index of 9.7% is impressive, especially due to the muted levels of household income that usually follow the preceding quarter of each year (due to year-end bonuses being paid),” reads the document.
Lower interest rates boosts property sector
The property brief revealed that a year-on-year increase of 6.1% is also impressive and has consolidated the 16% recovery rate over the past two years.
Lower interest rates have boosted home-buying activity, with the BetterBond Home Loan Index up 21.8% since the low point in the fourth quarter of 2023, when the highest interest rates in 15 years were biting into the pockets of prospective homeowners.
“Hopefully, a swift ending to the hostilities in the Middle East will lead to a resumption of the declining interest rate cycle.”
People buying houses over R1m
The property brief noted that average house prices for both first-time buyers and repeat buyers continued to rise in the first quarter of 2026, increasing by 3.6% and 5.3% year-on-year, respectively. Prices also increased after adjusting for inflation, with overall home values up 3.2% compared to a year earlier.
New record highs were reached in the first quarter of 2026, with average prices of R1.67 million for all buyers and R1.35 million for first-time buyers. Quarter-on-quarter gains were stronger for first-time buyers at 2.7%, while the overall average home price rose by 2% since Q4 2025.
“The upheaval caused by the war in the Middle East has led to a sharp increase in oil and fuel prices, which has contributed to a pause [in] the rate-cutting cycle that started in September 2024,” noted BetterBond.
“Unfortunately, there have been no further rate cuts in 2026, with the prime lending rate still at 10.25% – marginally higher than the rate that existed before the pandemic-induced lockdowns of 2020.”
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