7 Property trends we’re seeing in South Africa in 2024

Article summary

• Interest rates were trending upward for a while but that is expected to reverse in the near future.
• Buy-to-let is surging in the Western Cape due to increased competition for a limited supply of properties.
• Semigration continues to make large homes in remote areas a solid investment.
• Other factors include increased co-buying, high home loan approval rates, and high pre-approval rates.

In this age of constant change, the stability of bricks and mortar is especially appealing, and property investment remains a solid foundation for economic prosperity even in such tumultuous times.

So what do investors need to know about the movements of the property market in 2024? Interest rates, semigration, and foreign investment are just some of the factors that need to be taken into account.

Property trends in South Africa for the upcoming year

1. A cease in interest rate hikes.
2. Increase in co-buying.
3. Surge in buy-to-let.
4. Semigration.
5. High home loan approval rates from banks.
6. First-time homebuyers prioritising deposits.
7. High pre-approval rates.

1. Interest rates

A succession of interest rate hikes intended to combat inflation slowed down the housing market in the past couple of years, but in September 2023, the rate was left unchanged.

Despite rising inflation, PwC and Nedbank are predicting rate cuts in the future as the South African Reserve Bank looks to stimulate the market. This is sure to bring about an increase in home loan applications.

ooba Home Loans has already reported an uptick in applications thanks to the easing of interest rates, with August data recording an 8% increase in the monthly intake of applications.

2. Increase in co-buying

Co-buying is when two or more people purchase a property together, dividing the home loan repayments and management costs between themselves.

This is an option employed by couples, friends, and business partners.

Co-buying provides a way for young homebuyers to get on the property ladder.

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).

3. Surge in buy-to-let.

The buy-to-let market hit an all-time high in June 2023, accounting for 10.9% of all home loan applications received by ooba Home Loans.

The Western Cape especially has seen an uptick in buy-to-let purchases. Much of this can be attributed to foreign buyers looking to snap up luxury properties and rent them to tourists.

Increasing competition due to semigration and foreign investment, combined with an undersupply of properties and high property prices, had led to an increase in tenants in areas like the City Bowl, Atlantic Seaboard, and Southern Suburbs.

4. Semigration

Work-from-home is on the rise, leading to a higher demand for larger houses in scenic areas.

Western Cape is an obvious target for people seeking more peaceful surroundings, with coastal areas being especially popular.

Property investors would do well to take advantage of semigration by investing in large properties in scenic areas.

5. High home loan approval rates

Rising inflation has not made banks any less willing to approve home loan applications. In fact, increasing competition between banks has led to better deals with lower interest rates for homebuyers.

ooba Home Loans reports an 83% approval rate in 2023, with an average interest rate of 0.43% below prime. 

6. Increase in deposits

You’d think deposits would be the biggest challenge for first-time homebuyers, but as of August 2023, the average deposit as a percentage of the purchase price stands at 10.9%. 

This could be the result of a decrease in the average purchase price (R1.47 million in March 2023 to R1.43 million in August 2023).

7. High pre-approval rates

Pre-approval provides homebuyers with an idea of what they can afford and an analysis of their credit record.

It allows homebuyers peace of mind in that they’ll have a solid idea of what they can afford, and serves as proof that the home buyer can afford the home loan, making banks more likely to approve it.

Pre-approval is so effective that ooba Home Loans has an approval rate of 92.3% for home loan applications that have been pre-approved.

Get pre-approved with ooba Home Loans

Knowledge of property trends leads to wiser property investment, but the best info to arm yourself with is knowledge of what you can afford in the first place.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.