The Real Estate Round-Up

Interest‑rate and macro‑economic context

• Inflation and rate‑cut expectations – Headline inflation ticked up to 3.0 % in June (from 2.8 % in May), still inside the South African Reserve Bank’s 3–6 %. Analysts said this modest rise still left room for further easing; Investec’s chief economist predicted at least one more 25‑basis‑point cut this year. Economists polled by Reuters and the Mail & Guardian expected the Monetary Policy Committee to cut the repo rate at its 31 July meeting; the repo had already been lowered to 7.25 % in May after four cuts since September 2024. Some economists cautioned that rising food prices or U.S. tariffs could limit future cuts.

• Market response – BetterBond’s July Property Brief noted a 7.4 % year‑on‑year increase in home‑loan applications for the 12 months to May 2025. Ooba Home Loans said application volumes were up 11 % and the total value of bonds issued rose 18.5 % year‑on‑year, suggesting pent‑up demand after earlier rate cuts.

Regional market dynamics

• Western Cape – Cape Town continues to dominate the high‑end market. Ooba’s data showed Western Cape buyers secured the largest average interest‑rate discount at prime minus 0.96 percentage points, and the province’s average purchase price rose 3.3 % to R2.39 million. Statistics South Africa data cited by CapeTown Etc indicated home values in Cape Town have increased 160 % since 2010, making ownership increasingly difficult for younger buyers. Bloomberg reported that the Western Cape accounts for about 40 % of national property sales over R10 million. The city has released land in Salt River and Woodstock and launched a Development Charges Fund to promote affordable housing, but officials admit supply remains tight.

• Gauteng/Free State – Ooba’s data highlighted double‑digit growth in average purchase prices in parts of Gauteng; Free State and Tshwane showed the largest year‑on‑year increase in average purchase price (12 % and 10.1 % respectively). BetterBond reported that Greater Pretoria was the fastest‑growing region for home‑loan approvals, with a 26.7 % year‑on‑year increase. Johannesburg North‑West, North West and Mpumalanga under‑performed.

• Eastern Cape & Mpumalanga – Both provinces saw home‑loan volumes decline. Eastern Cape buyers still enjoyed sizeable rate discounts (average prime minus 0.74 p.p.)

• Semigration & secondary cities – Absa’s Homeowners Sentiment Index noted continued net migration into the Western and Eastern Cape and out of Gauteng. Industry professionals highlighted growing demand in smaller cities such as Stellenbosch, George, Rustenburg, Nelspruit and Polokwane, driven by lifestyle, telecommuting and affordability.

Housing‑market statistics & affordability

• Loan values and deposits – BetterBond’s index listed an average first‑time‑buyer price of R1.28 million, with deposits averaging R165 000. Deposits declined 17 % for first‑time buyers and 11 % for all buyers in Q2 2025, suggesting lenders are more willing to grant 100 % loans. Ooba reported that the average concession rate improved to prime minus 0.67 p.p. (better than earlier quarters).

• Real prices & debt burden – BetterBond pointed out that real house prices are still 6.4 % lower for all buyers (and 8.3 % lower for first‑time buyers) compared with Q1 2022. Debt‑service costs have declined from 9.1 % to 8.9 % of disposable income, but credit‑impairment ratios are just 2.5 %, indicating households remain cautious. Absa’s survey found 84 % of homeowners optimistic about the market, with many viewing property as a source of long‑term value and rental income.

Trends and insights

• Luxury & rental markets – Live Real Estate reported that Cape Town’s limited stock has driven luxury prices up 160 % since 2010, with R318 million in transactions across 10 high‑end properties in June. Secondary cities are attracting investors seeking lifestyle benefits and more affordable prices. There is strong rental demand in well‑located suburbs, but 26 % of rental applicants in Q1 2025 were flagged as high‑risk.

• Housing supply & affordability for young buyers – CapeTownEtc’s report noted that studio apartments in Cape Town’s City Bowl now sell for over R1 million and that young “Born Free” professionals struggle to enter the market. Banks offer 100 % loans and group‑buying options, but lack of intergenerational wealth remains a barrier.

• Municipal rates and service charges – Property Professional highlighted that Johannesburg’s 2025/26 budget raises electricity tariffs by 12.74 %, water and sanitation by 13.9 %, refuse removal by 6.6 % and property rates by 4.6 %, while Cape Town’s rates rise 7.96 %. Industry groups warned that linking sanitation charges to property size could lower rental affordability and discourage home ownership.

• Lifestyle and design trends – Buyers are prioritising smaller homes, mixed‑use developments and sectional‑title properties, fuelled by remote work and the prime rate’s stabilisation at 10.75 %. There is growing adoption of prop‑tech, multi‑generational living and shared ownership models, and tenants increasingly demand fibre connectivity, backup power and pet‑friendly policies.

Outlook

While high inflation for food, rising municipal tariffs and weak economic growth remain headwinds, the possibility of another interest‑rate cut and easing credit conditions have buoyed sentiment. Demand is strongest in the Western Cape and in smaller cities that offer lifestyle advantages, whereas affordability pressures persist for first‑time buyers in major metros.