First-Time buyers get a break as affordability improves

• Lower deposit requirements are making it easier for first-time buyers to enter the housing market despite higher interest rates.
• Regional affordability varies sharply, with the Western Cape remaining strong while other provinces offer lower entry costs.
• Higher incomes, resilient demand and easing inflation are creating a renewed window of opportunity for aspiring homeowners.

First-Time buyers get a break as affordability improves

South Africa's residential property market is showing renewed resilience, offering first-time buyers a rare opportunity to enter the market despite a challenging interest rate environment.

While the recent increase in the prime lending rate has lifted monthly bond repayments, improving affordability is emerging from several other directions.

Banks have become more accommodating on deposit requirements, household incomes continue to strengthen, inflationary pressures are easing and the broader economy is showing signs of recovery.

According to the latest BetterBond Property Brief, these factors are helping to offset higher borrowing costs and supporting continued demand for home ownership. However, the report also highlights a critical reality for buyers: where you choose to buy has become just as important as when you buy.

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"The reduction in deposit requirements is a welcome shift, particularly for first-time buyers who continue to face affordability challenges," says Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond.

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Lower deposits open the door to homeownership

One of the biggest barriers facing first-time buyers has always been raising enough cash for a deposit. Encouragingly, that hurdle is beginning to ease.

After peaking at more than R300,000 in April, the average deposit required from all buyers has fallen by 16%, while deposit requirements for first-time buyers declined by 12% over May and June.

Looking over the longer term, the improvement is even more significant. Average deposits required from first-time buyers have dropped by 29%, from approximately R230,000 in March 2024 to around R163,000 in June 2026.

Despite higher interest rates, first-time buyers continue to enter the market. The average purchase price for this segment has reached a record R1.4 million, while average house prices for first-time buyers increased by 9% year-on-year, comfortably outperforming inflation.

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"House prices for first-time buyers have continued to increase in both nominal and real terms, demonstrating the resilience of demand despite a higher interest rate environment," says Potgieter.

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Regional differences shape affordability

While affordability is improving nationally, the opportunities differ considerably across South Africa.

The Western Cape continues to outperform, recording annual house price growth of 13% and an average home value of R2.4 million. First-time buyers in the province are now paying an average of R1.9 million for a home, up 14% over the past year, highlighting continued demand despite higher prices.

In Gauteng, affordability is gradually improving. Johannesburg's South-Eastern suburbs remain the country's strongest market for first-time buyers, while both Johannesburg North West and Pretoria have experienced meaningful reductions in average deposit requirements.

Elsewhere, buyers are benefiting from significantly lower upfront costs:

• Limpopo: Deposit requirements down 56%
• Eastern Cape: Down 22%
• KwaZulu-Natal: Down 10%
• Mpumalanga: Down 9%

By contrast, the Northern Cape tells a different story. Although bond approvals have increased, first-time buyers now face deposits that are 78% higher than a year ago, underlining the importance of understanding local market dynamics before purchasing.

Stronger incomes underpin market resilience

Perhaps the most encouraging trend is the improvement in household earning power.

Over the past four years, the average income of first-time homebuyers has increased by 15.5% in real terms, significantly outperforming the broader formal economy, where wages have grown by only 2.8% over the same period.

Today, the average first-time buyer earns approximately 64% more than the average formal sector employee.

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"This stronger earning power has enabled many first-time buyers to absorb higher borrowing costs and rising house prices while continuing to pursue home ownership," says Potgieter.

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The improving income profile is helping sustain demand, even as financing costs remain elevated.

Key Market Metrics at a Glance

The July BetterBond Property Brief highlights several positive indicators:

• GDP growth: 1.4% year-on-year in Q1 2026
• Rand: Approximately 8% stronger against the US dollar than a year ago
• Inflation: Lower fuel and food prices expected to ease inflationary pressure
• Home loan applications: Softened after the latest rate increase but remain 5.7% higher than two years ago
• Average home prices: Record highs for both first-time and repeat buyers
• Deposit requirements: Continuing to decline after earlier peaks
• Regional growth: Four provinces recorded double-digit annual house price growth, led by Mpumalanga
• Bond approvals: Continued year-on-year growth, reflecting resilient buyer demand

South Africa's housing market is proving more resilient than many anticipated. While higher interest rates continue to test affordability, lower deposit requirements, stronger household incomes and improving economic fundamentals are creating fresh opportunities for first-time buyers.

The message from BetterBond's latest Property Brief is clear: the window of opportunity has reopened—but buyers need to be strategic.

Regional price trends, deposit requirements and local affordability now vary more than ever. Those who carefully assess where they buy, rather than simply when they buy, are likely to be best positioned to secure long-term value as confidence gradually returns to the residential property market.

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