BetterBond
South Africa’s housing market continues to show signs of steady recovery as lower interest rates, improving bank health, and renewed economic momentum support a gradual uplift in demand. According to BetterBond’s latest Property Brief for November 2025, the sharp decline in bank impairments since late 2024 – together with a falling bond yield – suggests that credit conditions are finally easing after several years of restrictive monetary policy.
The month in numbers:
- 30% increase in home loan applications since Q4 2023
- R1.27 million – average FTB purchase price
- 17.4% YOY increase in loans granted to first-time buyers (FTBs)
- 125 basis points decline in prime rate between Sept 24 and Nov 25
Bank impairments continue to fall
Ever since the Monetary Policy Committee (MPC) began to relax its long-standing restrictive monetary policy in 2024, both the value of bank impairments (bad debts) and the ratio of impairments to total bank assets have started a welcome downward trend. South Africa’s benchmark long-term interest rate (the 10-year bond yield) has also declined by 225 basis points since the beginning of April, providing a message to the MPC that its monetary policy stance is behind the curve and is still too restrictive to encourage sustained high levels of growth in demand, which the economy desperately needs.
BetterBond index of home loan applications
The decision by the MPC of the Reserve Bank to keep the repo rate unchanged at its September meeting has prevented any meaningful further improvement in the number of home loan applications received in October. Although the latest BetterBond index of home loan applications managed to increase by 3.2% in October compared to the average for Q3, the YOY increase (October 2024) was muted at only 0.4%. Little doubt exists that many prospective homebuyers are sitting on the sidelines, hoping that interest rates will decline further. During October, the BetterBond index of home loan applications nevertheless increased to its highest level since Q3 2022. The index remains 18.6% lower than its peak during Q1 2021 but has recovered by 30% since bottoming out in Q4 2023.
Average home purchase prices
The average home purchase price for all buyers remained static in October, equalling the new record high achieved during Q3 and remaining marginally above R1.6 million. The market for first-time buyers (FTBs) was tighter in October, with a decline in the average home price of 3% to a level of R1.27 million.
Although the average house price for all buyers has increased by 7% since Q2 2023, the impact of inflation has reduced this to a decline of 2.1%. For FTBs, the average house price in real terms has declined by 4.5% since Q2 2023, when the prime rate had increased by 425 basis points over a period of only 17 months. The fact that the average house price has declined by an annual average of 5.7% since the beginning of 2021, confirms the negative impact on the housing market as a result of restrictive monetary policy. Hopefully, further rate declines are in the offing.
Deposit requirements have declined sharply
One of the most encouraging features of homebuying activity during October was the sharp decline in the average deposit required by FTBs since a year ago, namely 21%. Although the average deposit required for all buyers increased marginally QOQ, it has also declined by more than 6% since October 2024.
Lower interest rates since September, combined with a decline in the ratio of bank impairments to bank assets have assisted the more lenient approach of mortgage loan providers since the beginning of 2024. Between Q1 2024 and October 2025, the average deposit for all buyers declined by 8%.
For FTBs, the decline since reaching a peak in Q2 2024 has been significant, namely 26%. Any further lowering of the deposit requirements is likely to boost homebuying activity, which may well occur during the last quarter of 2025.
First-time buyers remain a bright spot
Over the past two years, a significant improvement has occurred in the number of home loans granted to FTBs. Between the 12 months to October 2023 and 2024, the residential property market took a hefty knock, induced by the highest interest rates in 15 years, which put the prospect of buying a home out of reach for many people, especially in the lower income groups.
Fortunately, this has changed over the past 12 months, with the YOY increase in total home loans granted to FTBs rising by 17.4% – an impressive improvement on the increase of merely 3.3% between 2023 and 2024. Johannesburg’s South-Eastern suburbs have retained their number one position for the number of home loans granted to FTBs, with the Western Cape and Johannesburg’s North-Western suburbs neck-on-neck for position number two.
Homebuyer incomes rising faster than inflation
Over the past four years, the rate of increase in the incomes of homebuyers for every age group has outpaced inflation by a considerable margin. Between 2021 and 2023, the best performing age group was homebuyers aged between 51 and 60, with their average incomes increasing by more than 35%.
This age group also occupies pole position for average incomes during each of the years between 2021 and 2025. Homebuyers aged 41 to 50 years enjoyed the largest increases between 2023 and 2025, namely 22%, with those aged above 60 in second place. Over the past two years, the impact of weak economic growth and high interest rates resulted in a much smaller average real increase for all age groups, dropping from 14.2% between 2021 and 2023 to 8%.
