Is It a Good Time to Buy Property in South Africa? A Comprehensive 2025 Market Analysis

Article summary:

• Yes, despite economic challenges, the current market offers several advantages for buyers, including relatively low interest rates (compared to historical averages), high bank approval rates (over 80%), and decreased deposit requirements (below 10%).
• However, buyers should consider potential market slowdowns, rising inflation, and their personal financial situation before making this significant investment.

Property investment has long been considered one of the safest and most reliable long-term investment options in South Africa. But with recent economic challenges such as rising inflation, many prospective buyers are questioning: Is it a good time to buy property in South Africa?

Current State of the South African Property Market in 2025

Price Growth vs. Inflation

Lightstone forecasts that house prices will grow at approximately 2.5% in 2025, which is below the current inflation rate of 2.7% (a significant decrease from 3.2% in March and falling below the South African Reserve Bank’s (SARB) target range of 3% to 6%).

This creates a buyer’s market scenario where:

– Real house prices (adjusted for inflation) are effectively declining
– Buyers have increased negotiating power with sellers
– Available property inventory is expanding as developers respond to demand

The Impact of Interest Rates

Interest rates have seen several hikes since the record lows of the COVID period.However, in 2023 experts predicted an end to interest rate hikes. Sure enough, the interest rate was left untouched in September 2023.

In early 2024, experts predicted that late 2024 and early 2025 would see cuts. Predictions again bore out as the past few months have seen several successive interest rate cuts.

As of May 2025, the prime lending rate is 10.75%.

Experts predict more interest rate cuts for 2025, although they expect the SARB will only cut 25 basis points at a time. The interest rate may be as low as 10.50% by the end of 2025.

How do the interest cuts affect your bond?

When you take into account that the interest rate was 11.75% for most of 2024, the recent cuts make 2025 a year for substantial savings.

Here’s what you’ll save on a home loan in 2025 versus the 2024 interest rate of 11.75% (assuming a 20-year term and 10% deposit).

Loan value	Monthly repayment at 11.75%	Monthly repayment at 10.75%	Monthly savings	Total savings
R1 million	R9 753	R9 093	R660	R158 323
R2 million	R19 507	R18 186	R1 321	R316 645
R3 million	R29 260	R27 279	R1 981	R474 968
R4 million	R39 013	R36 372	R2 641	R633 291
R5 million	R48 767	R45 465	R3 302	R791 613

Five Reasons Why Now Might Be a Good Time to Buy

1. We’re Still in a Buyer’s Market

With property supply outpacing demand in many areas, buyers have leverage to negotiate better deals. Property developers continue to launch new projects, particularly in growth nodes like:

– Waterfall (Gauteng)
– Sibaya Coastal Precinct (KZN)
– Century City (Western Cape)

This increased availability of properties means sellers often need to price competitively to attract buyers.

2. Bank Competition Benefits Borrowers

The current lending environment heavily favors buyers:

– Bank approval rates remain above 80% according to ooba Home Loans statistics
– Average deposit requirements have decreased to below 10% (compared to 18%-23% in 2007/2008)
– 100% home loans are readily available for qualifying buyers
– Banks are actively competing to offer better interest rates to attract customers

3. Strong Rental Demand for Investors

For those looking to invest in buy-to-let properties, rental demand has strengthened significantly:

– Return-to-office policies have increased demand for properties near commercial centers
– Rental yields in high-demand areas are averaging 7-9%
– “COVID baby” developments with work-from-home facilities attract premium renters
– Young professionals are entering the rental market as they secure employment

4. First-Time Buyer Incentives

First-time buyers can take advantage of several current incentives:

– No transfer duties on properties under R1.210 million
– Higher qualification rates for 100% home loans
– Special bank programs designed specifically for first-time buyers
– Government subsidies for affordable housing segments

5. Long-Term Investment Potential

Despite short-term fluctuations, property remains a solid long-term investment:

– Historical property appreciation in South Africa averages 6.2% annually over the past 20 years
– Property provides an inflation hedge during economic uncertainty
– Tangible asset value compared to more volatile investment options
– Opportunity for equity building through mortgage repayment

Who Should Buy Property Now?

Ideal Buyers in the Current Market

1. Long-term investors with a 5+ year horizon

– Those focused on capital growth over time
– Buyers who can weather short-term market fluctuations

2. First-time homebuyers with stable employment

– Those currently paying rent comparable to potential mortgage payments
– Buyers who qualify for government subsidies or bank incentives

3. Buy-to-let investors targeting high-demand areas

– Investors focused on positive cash flow from day one
– Those with sufficient reserves to handle potential vacancies

4. Upsizers looking for value

– Families needing more space who can leverage the buyer’s market
– Those trading up while maintaining affordability

Who Should Wait to Buy

1. Short-term speculators expecting quick capital gains
2. Financially stretched buyers without adequate reserves
3. Those lacking job security in the current economic climate
4. Investors without thorough research into specific market segments

Buyer’s Checklist: Are You Ready to Buy?

Before deciding to purchase, ensure you can check off these essential items:

– Your debt-to-income ratio is below 30%
– You have an emergency fund covering 3-6 months of expenses
– Your employment situation is stable
– You’ve been prequalified for a home loan
– You understand the full costs of ownership (including rates, maintenance, etc.)
– You’ve researched the specific neighborhood and property type
– You’re committed to staying in the property for at least 5 years
– You’ve considered future interest rate increases in your budget

Expert Predictions: South African Property Market 2025

Industry experts offer varying perspectives on where the market is heading:

“The residential market will likely see continued segmentation, with affordable housing outperforming luxury segments. Areas with reliable infrastructure and security will command premium prices.” – Samuel Seeff, Chairman of Seeff Property Group

“First-time buyers will continue to drive market activity, particularly in the R700,000 to R1.5 million price range, where bank competition remains fierce.” – Rhys Dyer, CEO of ooba Home Loans

Getting Started: Steps to Take Now

If you’re considering buying property in the current market, here are the practical steps to take:

1. Get Prequalified

Understanding what you can realistically afford is the essential first step. Prequalification assesses your:
– Credit score and history
– Income stability and amount
– Existing debt obligations
– Affordability based on current interest rates

This process provides you with a clear picture of your buying power and helps you focus your property search on realistic options.

Get prequalified with ooba Home Loans or use our free online Bond Indicator to get an initial estimate.

2. Save for Associated Costs

Beyond the property price, budget for:

– Transfer duties (for properties above R1.1 million)
– Attorney fees
– Bond registration costs
– Moving expenses
– Immediate maintenance or renovation needs

3. Research Target Areas

Different areas offer varying investment potential. Consider:

– Historical price growth patterns
– Infrastructure quality and development plans
– Crime statistics and security measures
– Proximity to amenities (schools, shopping, healthcare)
– Future development plans that might affect property values

4. Work with Professionals

Engage qualified professionals to assist with your purchase:

– Reputable estate agents familiar with your target areas
– Mortgage originators to secure the best possible loan terms
– Property attorneys specializing in real estate transactions
– Home inspectors to identify potential property issues

Frequently Asked Questions

Is it better to wait for interest rates to drop before buying?

Waiting for interest rates to drop means potentially missing out on current property opportunities. Remember that you can always refinance your home loan when rates eventually decrease, but property prices may have increased by then.

How much deposit do I need to buy a property in South Africa now?

Many banks are offering 100% home loans to qualifying buyers, meaning no deposit is required. However, providing a deposit of 10% or more can help secure better interest rates, reducing your long-term costs significantly.

Which areas in South Africa show the best investment potential?

Growth corridors in major metros continue to show strong performance, particularly areas with reliable infrastructure, good security, and proximity to economic opportunities. Specific high-potential areas include parts of the Western Cape, northern Johannesburg, and coastal KZN.

Conclusion: Is It Really a Good Time to Buy?

The answer to whether it’s a good time to buy property in South Africa depends largely on your personal circumstances, financial stability, and long-term goals.

For those with secure finances, a long-term perspective, and thorough research into specific market segments, the current environment offers several advantages: relatively low interest rates by historical standards, high bank approval rates, reduced deposit requirements, and increased negotiating power in a buyer’s market.

However, buyers should approach the market with awareness of the economic challenges and ensure they have the financial resilience to weather potential market fluctuations and interest rate changes.

The South African property market has historically rewarded patient, well-prepared investors who make decisions based on solid research rather than emotion or speculation.

Ready to take the next step? Get prequalified today with ooba Home Loans and discover what you can afford in today’s market.

This article was last updated in June 2025 and reflects market conditions at the time of publication.