Property Investment in 2025 – Trends, Insights, and Opportunities in South Africa

Article summary:

• First, find out what you can afford by getting pre-approved with ooba Home Loans.
• Research the market to find out about interest rates, supply and demand, and other factors that will affect your investment.
• Consider hiring an estate agent to advise you on the movements of the market.
• Apply with ooba Home Loans to secure the best deal on your bond.

Interest rate cuts and high demand make it a good time for property investment. If you’re looking to get a foot on the ladder, here are some property investment tips that should help you reap the benefits of a burgeoning property market in 2025.

Note Before entering the property hunt, you should find out what you can afford. You can do this by getting pre-approved with ooba Home Loans. We assess your financial situation and provide a solid estimate of what you can afford.

Property investment in South Africa: What to know

1. About buy-to-let.
2. Assessing a property’s value.
3. Property market.
4. Funding your purchase.
5. Diversifying your portfolio.

1. About buy-to-let

Buy-to-let is the bread and butter of property investment. It’s when you purchase a property and rent it out to tenants.

Understanding rental yield
You’ll often hear buy-to-let investors talk about the rental yield on their properties (or property portfolios).

The yield is simply the annual rent you’re earning on the property divided by its value, expressed as a percentage.

So a house worth R1 million, on which the annual rent is R120 000 (R10 000 a month) would be yielding 12%.”

When investing in rental property, prospective rental yield is something you need to assess before going ahead with the purchase.

Understanding your responsibilities as a landlord:

• Interviewing tenants to assess their credibility.
• Drawing up a lease agreement (pay careful attention to the terms).
• Managing repairs and maintenance for the property.
• Dealing with difficult tenants.
• Ensuring tenants pay rent on time (if the tenant is late with payments, you can serve a legal notice, proving a written demand for payment. The tenant has 20 business days to respond).
• Evicting unruly tenants (you can initiate eviction procedures in compliance with the law. Seek legal advice if you’re unsure of your legal obligations).

2. Assessing a property’s value

Location is the most important factor when assessing a property’s location. You can look at the price other properties in the area have been sold for to get an idea of what you must pay.

You can look at the going rental rate for other properties in the area to estimate your rental yield.

Other factors affecting value:

• The age of the house.
• The size of the house.
• The condition of the house.

We recommend hiring an estate agent. They will be able to advise you on the value of properties dependent on location, as well as their likely profitability.

Flipping houses
A common investment strategy is to purchase properties that are in poor condition, renovate them, and sell them at a profit.

This is a risky strategy and not recommended for inexperienced investors. But buying a low-value property in a good location, or an up-and-coming suburb, is an especially effective form of investment.

Either way, renovations are an effective way to boost a property’s value.

3. The Property market

You need to research the property market before investing. Multiple factors, such as supply and demand, interest rates, and political factors, have an influence.

Again, an estate agent can be an invaluable asset in understanding the movements of the market.

The property market in 2025: Why it’s a good time to invest

• With the elections resolved, political uncertainty will no longer disrupt the property market.
• Demand for properties is high due to a shortage of supply.
• Experts predict more interest rate cuts in 2025.

More on interest rates

As of January 2025, the interest rate is 11.25%. This follows an interest rate cut of 25 points in September 2024; the first cut in years, and another in November 2024.

Experts predict more cuts on the horizon, making it a good time to invest in property.

4. Funding your purchase

The standard way to fund your purchase is to apply for a bond.

The bank will assess your bond application and decide whether to approve it. Your chances will depend on your financial situation, most importantly your credit record. If your bond is approved, your financial situation affects the interest you will pay.

The best way to secure bond approval and low interest rates is to apply with ooba Home Loans. We submit your bond application to multiple banks, so you can compare the deals they offer and choose the best one.

So apply with ooba Home Loans to secure the best deal on your bond.

Joint bond application: A gateway to the market for first-time investors

This is when two or more parties take responsibility for a bond.

Joint bond applications provide a way for young homebuyers to get on the property ladder, as all bondholders will be responsible for repaying the bond.

You could invest with business partners, making the bond more affordable and more likely to be approved.

ooba Home Loans reports that of joint applications received, 75.3% were purchased with a spouse, whereas 24.7% were purchased with others (such as business partners or relatives).

5. Diversify your portfolio

It helps to understand the market so you can determine which property types are worth investing in.

For example:

• Student accommodation can be an effective investment in 2025 due to high demand vs low supply. In 2022, the International Finance Corporation (IFC) reported that there is a shortfall of more than 500 000 beds. Investors should be looking for affordable accommodation with on-site facilities that cater to student needs.
• Work-from-home: In the wake of the pandemic, the work-from-home lifestyle has become prevalent. As such, properties in remote, scenic areas have become more popular as people seek more comfortable home environments to enjoy their work. This has led to a rise in semigration, especially to coastal areas.
• Mixed-use-developments: Piggybacking off the above trend, there’s a higher demand, especially among younger generations, for complexes that offer on-site facilities such as office areas, fibre and gyms.

The rise of commercial properties
Residential properties may be the go-to investment option, but commercial properties (retail, industrial, warehouses, and office complexes) have become a potentially lucrative investment option.

The earnings potential is significantly higher on commercial properties. The Capex rate in South Africa is currently +11% for commercial properties, versus 5-8% for residential properties.

Retail properties are considered an especially promising investment currently. Retail properties made up 30% of commercial property transactions in 2023 / 2024. Data also showed that mall visits between January and October 2023 were up 3%.

Industrial properties are always a solid investment as they have longer leases and more committed tenants, and there is a high demand and low supply. Downsides include a limited tenant pool, significant maintenance costs, and the fact that owners are liable for injuries that occur on the property.

Bear in mind that banks will only finance up to 75% of a commercial property purchase, meaning you’ll need a deposit of at least 25%.

Before investing, find out what you can afford

Pre-approval will assess your financial situation, including your credit record, and provide a solid estimate of what you can afford.

You can hunt for properties within this price range, safe in the knowledge that you will likely obtain bond approval as your pre-approval certificate serves as proof you can afford it.

You can get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.