South Africa’s residential property market showed continued signs of recovery in the first quarter of 2025, with the national average purchase price climbing 2.2% year-on-year and 2% quarter-on-quarter to R1,661,519, according to ooba Home Loans.
Properties priced above R3 million accounted for 28% of applications, driven by semigration and a more affluent buyer profile. “These buyers tend to be older and more affluent, contributing to increased activity in the upper market,” said Rhys Dyer, CEO of ooba Home Loans.
Data from Lightstone for the first quarter 2024 showed that the majority of property transactions (71.4%), were below R1.5 million, while tansactions between R1.5 million and R3 million made up 19.7% of the market.
Only 9% of all property transactions were above R3 million, however, generating 36% of the total value of all transactions, equating to over R23.7 billion at an average price of around R5.5 million.
Buoyed by a stable interest rate environment and optimism around further rate cuts and improving economic conditions, home loan application volumes rose by 18%, while the total value of bonds granted jumped 22.3% compared to the same period last year.
Increased demand for home financing also intensified competition among major lenders. This led to a rise in the average approved bond size, up 2.5% for repeat buyers and 6.5% for first-time buyers.
“We’re now comfortably exceeding the R1.6 million mark – with expectations that house prices will continue to rise modestly throughout 2025,” said Dyer.
The average purchase price for first-time buyers climbed 4.5% year-on-year to R1,247,810. Regionally, Tshwane led price growth, with a 10.5% annual increase to R1.79 million, followed by the Free State at 8.8% to R1.15 million. The Western Cape maintained the highest average price at R2.33 million, despite a more modest 3.4% rise.
First-time buyer activity is rebounding, with a 1% year-on-year increase. They accounted for 46.5% of all applications in Q1—a figure supported by interest rate cuts and successive rate holds.
“First-time homebuyers accounted for 46.5% of all applications for the quarter, a promising figure underpinned by a succession of interest rate cuts over a period of six months and subsequent rate holds,” Dyer said.
Competitive lending has helped lower deposit requirements, especially for first-time buyers. However, the average national deposit remains elevated at 15.4%, translating to R255,514.
Among first-time buyers, the average deposit declined 15% year-on-year to R120,366, or 9.6%, just below the recommended 10%.
“Last year, first-time homebuyers placed greater emphasis on saving for deposits. That priority appears to have shifted, likely due to improved consumer affordability and the increasingly favourable lending terms offered by banks,” Dyer said.
Banks are offering increasingly competitive interest rates to attract borrowers. ooba Home Loans secured an average rate of prime minus 0.55% in Q1 2025—a 0.03 percentage point improvement from the previous year.
Approval rates remain strong, with 83.1% of applications nationally being approved.
Investment property demand also climbed in Q1 2025, with such applications comprising 12.9% of total volumes – up 0.5% year-on-year. The Western Cape continues to attract the lion’s share, accounting for 32% of all investment-related applications, up from 30.1% a year ago.