Rhys Dyer
ooba Group
CEO
The third quarter of 2024 signalled a significant turning point for the residential property industry, generating momentum to fuel growth well into 2025.
In October 2024, the market responded swiftly to the first interest rate cut of 25 basis points announced in September, with ooba Home Loans reporting year-on-year and month-on-month volume increases of 16% and 27% respectively.
Looking ahead, Rhys Dyer, CEO of the ooba Group, speculates that with more rate cuts soon to follow, homebuying activity will strengthen further. “Spurred on by factors such as additional interest rate cuts, better economic prospects, improved affordability and more stability, we strongly believe that demand for property in 2025 will reach levels exceeding those seen in recent years.”
Dyer unpacks 2025’s projected trends as follows:
1) Bank Lending Set to Aid Market Recovery
“Despite fluctuations in the market, the country’s banks continue to exhibit consumer-friendly lending behaviour,” says Dyer, pointing to December ’24 data, which saw attractive discounts to the prime lending rate of prime less 0.52%, bringing the year-to-date average to prime less 0.55% (compared to the prime less 0.44% achieved over the same period in the previous year).
“In 2024, the Western Cape achieved the highest average weighted concession of -0.84%, followed by the Eastern Cape at -0.64%.”
Source: ooba Home Loans
Dyer also notes some of the highest loan-to-value (LTV) ratios in recent years.
“The national LTV ratio peaked at 86.7% in Aug ’24 and has since drifted lower – ending the year at 83.6%,” he says.
“Regionally, bank approval rates were highest in the Western Cape (averaging 86.6% last year), followed by Johannesburg at 85.2% – clear indicators that these areas remain key priorities for the banks and that they will continue to drive growth and resilience in 2025’s property market.”
2) Consumer Saving and Spending Habits in Focus
2024 saw improved financial prosperity amongst homebuyers – particularly first-time homebuyers – with more sizeable deposits being put down. “Despite a slight dip, first-time homebuyer’s deposits levelled out at 9.9% in Q4 ’24. This figure highlights a sound understanding of the benefits of putting down a deposit.”
Dyer highlights some good news for those struggling to save for deposits, with the expected resurgence of zero-deposit bonds in 2025. “Overall, deposits are shrinking, potentially influenced by stronger lending activity from banks,” he says.
“While zero-deposit applications currently sit at 53.7% (Q4 ’24) – down by 13.8 percentage points from its peak in June ’20, we expect to see the banks leverage these to support keen homebuyers.”
3) First-Time Homebuyer Growth Set to Accelerate
The demand from first-time homebuyers continues to gain momentum, with home loan applications rising from a mid-year low of 45.2% to 46.9% by December ‘24.
“This data indicates that the first-time homebuyer segment is poised for a strong year, primarily fuelled by lower interest rates,” says Dyer.
Analysing regional trends, Dyer adds: “Last year, our data revealed that demand was highest in the three most affordable regional housing markets: Free State (57.9%), Mpumalanga (54.0%), and Gauteng South & East (52.3%). These were the only regions where first-time homebuyers represented more than half of all applications received.”
Notably, the average price paid by first-time homebuyers rose to R1.19 million in December ’24, a 5.2% year-on-year growth. “The Western Cape remains a hotspot for this segment, with the average purchase price climbing by an impressive 9.3%, followed by the Free State with a 5.8% increase,” Dyer notes.
4) Western Cape Semigration Frenzy Tapers Off
The latest data released by Stats SA revealed a notable decline in approved building plans for the City of Cape Town, with a high concentration of high-value activity taking place in sought-after coastal towns like Knysna.
“Knysna and other smaller, more affordable coastal towns like George are on a sharp upward trajectory set to gain momentum in 2025.”
“Knysna and other smaller, more affordable coastal towns like George are on a sharp upward trajectory set to gain momentum in 2025.”
Source: Stats SA
“Rising costs, congestion and challenges like long school waiting lists largely drive Cape Town’s downward trend.” Lightstone’s data supports this, illustrating a sharp drop off in Western Cape semigration in the first half of 2024 compared to the movement’s peak in 2022.
Source: Stats SA
5) Reverse Semigration on the Cards
ooba Home Loan’s figures show a turnaround in the growth of house prices in both Tshwane and Johannesburg from April 2024, signalling the speculative return of homeownership demand to the country’s economic hub.
FNB’s Q4’24 Estate Agent Survey echoes this sentiment, with the most significant marked improvement in housing market activity in this region.
SOURCE: ooba Home Loans
Furthermore, one of the country’s largest developers, Balwin Properties, reported that Gauteng regained its position as the company’s top revenue contributor by region at 49% (financial results ending August 31, 2024).
6) More Self-Employed Buyers Will Signal Market Confidence
ooba Home Loans’ data indicates steady growth in this category, with applications increasing to 14% in Q4 ’24 (up from 13% in Q4 ’23). “Interestingly, self-employed buyers accounted for 21% of the total application value in December ‘24, reflecting growing economic confidence and increased investment activity in this segment.”
According to UN Trade Development, there are currently around 3 million SMEs in South Africa, with around 70% operating in the informal sector. “We believe that bank lending conditions, coupled with a positive outlook, will bode well for demand in this segment which has already shown remarkable progress over a short time.”
To conclude, Dyer says: “We do believe that these prevailing trends will continue into 2025, and we look forward to the positive impact that further rate cuts will have on the market this year as our industry gears up for high levels of growth and activity.”,