Q4 2024 Home Loan Data Points Towards A More Positive SA Property Market In 2025
Latest Data Outlines Expectations for a Better Property Market in 2025
The latest fourth-quarter 2024 (Q4 2024) home loan data, released by ooba Home Loans, paints a positive picture for the property market. Renewed activity, primarily from first-time homebuyers, is set to accelerate the sector’s recovery.
“Our Q4 2024 data revealed several key trends pointing to the steady recovery of the property market, led by solid demand from the first-time homebuyer segment, along with some interesting developments in homebuyer behaviour,” comments Rhys Dyer, CEO of the ooba Group.
A Five-Year Snapshot
Data from 2020 to date shows a declining trend in home loan application activity due to higher interest rates and economic uncertainty.
“Particularly evident from Q4 2022 onwards, activity dipped as inflation surged, prompting a series of interest rate hikes by the South African Reserve Bank, and the economy weakened, weighing on household finances,” says Dyer.
However, following two interest rate cuts and the easing of price pressures, sales activity has begun to recover, rising by 15.2% from year-earlier levels during the final quarter of last year. This recovery has been underpinned by improved business and consumer confidence, driven by factors such as the formation of the GNU and the suspension of load shedding.
First-Time Homebuyer Segment Shows Early Signs of Recovery
According to Dyer, first-time homebuyer demand is slowly recovering – edging up from a low of 45% in Q2 ‘24 to 46.1% in Q4 ‘24.
“This quarter’s figures, coupled with a sharp uptick in September 2024 (51%) when the first rate cut was announced, reflects a positive response to market changes and sets the tone for recovery and growth in 2025.”
Q4 ‘24 also saw a healthy increase in the average purchase price paid by the first-time homebuyer as well as the average approved bond size, up by 4.5% and 6.8% year-on-year, respectively.
Regionally, the Free State, the country’s more affordable housing market, recorded the highest ratio of first-time homebuyers in Q4 ‘24. “57.9% of applications received during Q4 ‘24 in the Free State were from the first-time homebuyer segment, 12.1% higher than the national average,” adds Dyer.
Shifting Profile of First-Time Homebuyers
Interestingly, Dyer shares 10-year data from ooba Home Loans, highlighting that today’s first-time homebuyer is making their foray into the property market later in life. “In 2014, the average age of our first-time homebuyer was just under 34 years old, while in Q4 ‘24, their average age is 36.”
Dyer also observes that in 2024, 64% of first-time homebuyers did not have dependents, compared to 54% 10-years ago. "The proportion of homebuyers without dependents has risen since the onset of the pandemic, a notable trend given that these homebuyers are also becoming older.”
First-time homebuyers are also increasingly tackling the challenge of homeownership jointly as a way to get a foot on the property ladder. “In 2014, 14% of this segment applied for a joint home loan, while in Q4 ‘24, 18% of this segment is doing so.”
The data also highlights increased interest in property investment and creating generational wealth. “Compared to a low of 4% in 2014, 10% of first-time homebuyers are now purchasing property for investment purposes. In addition, 60% of these transactions are for sectional title homes,” says Dyer, adding that these homebuyers are increasingly seeking out cheaper properties to rent out whilst still remaining a tenant themselves.
“With property prices in large cities becoming less affordable, ‘rentvestment’ is an appealing option for first-time homebuyers,” he adds.
The Property Market is Trending Upwards
Ooba Home Loans’ Q4 ‘24 data highlighted a consistent market recovery across various key indicators, including the average purchase price, the average approved bond size, the average weighted interest rate concession and the average approval rate.
“On average, homebuyers are now spending more on homes than they did a year ago - up by 4.3% at R1,628,654,” says Dyer. “This is the first time that our statistics have reached an average purchase price above R1.6 million, highlighting some exciting momentum,” says Dyer.
Similarly, the average approved bond size has increased by 5.6% over the same period, from R1, 301 million in Q4 ‘23 to R1, 375 million in Q4 ‘24, signalling a slight drop in average deposit from 16.6% in Q4 ’23 to 15.5% in Q4 ’24. This reflects a slight decline in the average deposit, dropping from 16.6% to 15.5%, which Dyer suggests may indicate an increase in the approval of 100% home loans.
Regional Pricing Shifts Explained
Regionally, there was a significant variation across the markets, with the average purchase price paid in 2024 ranging from a high of R2.29 million in the Western Cape to a more affordable R1.08 million in the Free State.
“The average price paid in the Western Cape breached the R2 million level in Q1 ‘21 as the ability to work from home during the pandemic encouraged a fresh wave of semigration by older, more affluent homebuyers to the province,” explains Dyer.
A closer examination of 2024’s house pricing data reveals that the strongest growth was recorded in the Western Cape, followed by Limpopo: the only two regions in which house price growth exceeded the average consumer inflation rate of 4.4% last year.
While Johannesburg was the only market to register negative growth in property prices, monthly data reveals that house prices in the Johannesburg metro market are recovering and look set to yield growth in 2025,” adds Dyer.
Bank Lending Remains Resilient
The past quarter saw ooba Home Loans achieve an average interest rate for their customers of prime less 0.55% - 7 basis points cheaper year-on-year.
“Looking to our data, the average interest rate achieved improved by 22 basis points between 2021 and.”
Dyer notes that bank approval rates are climbing, up by 1.1% year-on-year, now at an 83% approval rate. “This encouraging data shows the pivotal role that the banks continue to play in making homeownership more attainable, and the importance of shopping around to multiple banks to ensure the best chance of approval.”
Investment Property Continues to Soar
National demand for investment/buy-to-rent properties surged to 13.9% of total applications in Q4 ‘24 – up from the previous high of 11.8% in Q4 ‘23.
This trend was driven by the ongoing strong demand for investment and rental properties in the Western Cape, where 34% of all applications received in the final quarter of last year were for investment properties (compared to 29% in the final quarter of 2023).
The Eastern Cape also registered strong growth in investment demand during the final quarter of last year, rising from 14% of all applications in Q3 ’24 to 18% in Q4 ‘24.
Looking ahead, Dyer believes that we will continue to see double digit year-on-year increases in home loan activity in 2025. “A quick succession of rate cuts, with an expectation of another two rate cuts of 25bps each by end of March will certainly help stimulate further activity – particularly among first-time homebuyers.”
“We look forward to a significantly more buoyant property market in 2025, compared to what we have seen over the past two-years. ooba will be working closely with homebuyers, our banking and real estate partners to make the dream of owning a home a reality for thousands of South Africans in 2025.”