Property market gains momentum despite pressure

By Neale Petersen

May 13, 2026

Finance

Home loan applications climbed 6.2% year-on-year as lower interest rates continue supporting buyer activity.
First-time buyers are driving demand, with average purchase prices rising to a record R1.4 million.
Rising deposits and elevated construction costs remain major affordability risks for the residential market.

South Africa’s residential property market is showing renewed resilience, with stronger home loan activity, rising house prices and growing first-time buyer participation pointing to a sector gradually regaining momentum despite mounting economic pressures.

According to the latest BetterBond Property Brief, the market continues to recover as lower interest rates, improving household finances and stronger economic activity support buyer confidence.

However, elevated fuel prices, global geopolitical tensions and stricter lending conditions remain key risks to affordability and future market growth.

Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond, says the market has shown impressive resilience in difficult conditions.

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“We are seeing improvement in loan volumes, application activity and the average size of approved bonds. Most encouraging is that homebuyer incomes have increased faster than inflation over the past year,” says Potgieter.

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Strong House Price Growth

‍The latest data reveals the strongest year-on-year house price growth since the post-pandemic recovery period of 2020.

Average home prices for first-time buyers increased by 10.3% year-on-year, while repeat buyers recorded even stronger growth of 19.9%. Average home prices for all buyers have now surpassed R1.7 million, while first-time buyer properties reached a new record high of R1.4 million.

Potgieter says the market is finally reversing several years of inflation-adjusted house price decline.

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“After years of declining average house prices adjusted for inflation, house price growth is once again on an upward trajectory.”

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First-Time buyers fuel demand

‍One of the market’s strongest drivers remains first-time buyers, whose share of approved applications increased from 35.3% in 2024 to 37.65% this year.

These buyers are also purchasing higher-value homes, with average bond sizes increasing to R1.17 million, indicating stronger household earnings and improving affordability among younger buyers.

The Western Cape continues to outperform nationally, recording a 9.7% increase in first-time buyer incomes and the country’s highest average monthly first-time buyer income of R57,200.

Regional green shoots emerging

‍Regional housing activity is becoming increasingly broad-based.

Johannesburg’s South-Eastern suburbs remain the country’s largest contributor to home loan activity, accounting for 23.3% of all loans granted over the past year, followed by the Western Cape at 19.3%.

However, some of the strongest growth is emerging from smaller provinces.

The Free State and Northern Cape recorded exceptionally strong growth of 43% in home loans granted over the past two years, while the North West province benefited from stronger mining activity and rising platinum group metal prices.

Independent economist Dr Roelof Botha says broader economic indicators are also showing encouraging signs despite global uncertainty.

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“The year-on-year increase in light commercial vehicle sales during the first quarter is a clear sign of broad-based economic activity,” says Botha, noting that retail trade and private sector activity have also remained resilient.

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Shift in lending behaviour

‍Despite stronger market activity, banks are becoming noticeably more cautious.

BetterBond’s latest data shows a sharp 33% quarter-on-quarter increase in deposit requirements for homebuyers, with first-time buyers now needing deposits equal to roughly 38% of a property’s purchase price on average.

The sudden tightening in lending conditions reflects growing concern around inflationary pressures linked to rising fuel prices and global market instability.

This may temper buyer activity in the short term, particularly if interest rate cuts remain on hold.

Elevated construction costs continue

‍Construction costs also remain under pressure. Between the first quarter of 2025 and the first quarter of 2026, construction input costs increased by 4.3%, while average house prices rose by 6.9%.

The ongoing gap between replacement costs and property values continues supporting demand for existing homes rather than new developments.

This dynamic is expected to sustain the current buyers’ market environment for much of 2026.

The Bottom Line

‍South Africa’s residential property market is proving more resilient than many expected.

Improving household incomes, rising first-time buyer participation and stronger home loan activity are helping drive a gradual recovery despite global economic uncertainty, higher fuel costs and tighter lending conditions.

While affordability pressures and cautious banking behaviour remain important risks, the market is showing clear signs of renewed confidence, particularly in regions benefiting from stronger economic growth, employment activity and rising household earnings.

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