Quarter 1 2025 (Q1 ‘25) home loan statistics released by the country’s foremost home loan comparison service, ooba Home Loans, points to promising signs of market recovery and growing buyer confidence, underpinned by a two-year high in application volumes.
Commenting on the results, Rhys Dyer, CEO of the ooba Group, says: "Easing inflation and more manageable borrowing costs have helped boost homebuying sentiment, despite global uncertainty. Confidence is improving, with the market responding positively to renewed stability."
A stable interest rate environment, along with expectations of still further rate cuts and better economic prospects, are the fundamental drivers behind home loan application volumes increasing by 18%, rising from an index level of 76 in Q4 ‘23 to 90 in Q1 ‘25. The total value of bonds granted also increased sharply - up 22.3% - reflecting a shift toward higher-value property purchases.
Furthermore, stronger demand for home loan finance spurred on greater competition among South Africa’s major lenders in Q1 ‘25, resulting in a healthy year-on-year increase in the average approved bond size - up 2.5% for repeat homebuyers and 6.5% for first-time homebuyers.
House Price Recovery Continues with Tshwane Leading the Charge
The modest recovery in national house prices continued in Q1 ‘25, with the average purchase price rising to R1,661,519 - up by 2.2% year-on-year and 2.0% quarter-on-quarter.
"We’re now comfortably exceeding the R1.6 million mark – with expectations that house prices will continue to rise modestly throughout 2025,” comments Dyer.
The average purchase price among first-time homebuyers also increased, this time by 4.5%, year-on-year, reaching R1,247,810 in Q1 ‘25.
Tshwane led the way in annual growth in overall purchase price for Q1 ‘25, climbing 10.5% year-on-year to reach R1.79 million. The Free State followed with an 8.8% increase to R1.15 million. Meanwhile, the Western Cape maintained the highest average purchase price at R2.33 million, although at a more modest growth rate of 3.4%.
Property Sales by Price Segment
Reviewing historical bond data, Dyer notes a shift toward the >R3 million price band over the past three years, likely driven by semigration trends. “These buyers tend to be older and more affluent, contributing to increased activity in the upper market,” he says.
In Q1 ‘25, this segment accounted for 28% of volumes — six points behind the <R1.5 million to <R3 million band and on par with the >R750,000 to <R1 million range.
Deposits Drift Lower
Driven by competitive lending activity, deposit requirements - particularly among first-time homebuyers - continued trending downward. Still, Rhys Dyer notes a positive takeaway: “The current average deposit sits at 15.4% - 5.4 percentage points higher than the generally recommended deposit amount of 10%.”
The average deposit held relatively steady at R255,514. “This is a sign of sound financial planning and sustained liquidity in the market, especially given that the average purchase price for the quarter has increased.”
Among first-time homebuyers, the average deposit sits just below the recommended 10% level, at 9.6%. This figure represents a 15% year-on-year decline, with the current average pinned at R120,366. “Last year, first-time homebuyers placed greater emphasis on saving for deposits. That priority appears to have shifted, likely due to improved consumer affordability and the increasingly favourable lending terms offered by banks,” he adds.
First-Time Homebuyers in the Spotlight
Year-on-year, there has been a steady return of first-time homebuyers to the market, with a 1% increase recorded year-on-year. “First-time homebuyers accounted for 46.5% of all applications for the quarter, a promising figure underpinned by a succession of interest rate cuts over a period of six months and subsequent rate holds,” shares Dyer.
Regionally, 58% of home loan applications from first-time homebuyers were for properties in Mpumalanga, followed by the Free State at 55.9% and KwaZulu-Natal at 52.4%. Gauteng South & East was the only other region where first-time buyers made up more than half of all applications, at 51.2%.
Banks Battle it Out for Buyers
“Banks continue to compete for home loans market share by offering attractive discounts in the prime lending rate” says Dyer, pointing to ooba Home Loan’s average interest rate of prime minus 0.55% secured for its homebuyers in Q1 ‘25 - a notable year-on-year improvement of 0.03 percentage points.
The banks are also making home loans finance more accessible to homebuyers with zero deposit loans at flexible repayment terms, bolstering approval rates. For the quarter, ooba Home Loans achieved a national bank approval rate of 83.1%, down by just 0.1% from Q4 ’24, with the Western Cape and Johannesburg enjoying the highest bank approval rates in the country (85.7% and 85%, respectively).
“We also continue to see a healthy ratio of applications declined by one bank but approved by another – at 43.2% - underscoring the importance of shopping around for a home loan.”
Buy-to-Let Remains a Popular Investment Strategy in Q1 ‘25
Investment properties remain in high demand, recording a year-on-year increase of 0.5% to reach 12.9% in Q1 ‘25.
“The Western Cape remains a top contender, accounting for 32% of all applications received in Q1 ‘25 compared to 30.1% a year ago,” states Dyer.
The Eastern Cape, which recorded strong investment demand in 2024, has seen investment applications weaken in 2025 – slipping to 12.9% in Q1 ‘25, down from 15.7% a year ago.
“While caution remains around macroeconomic and geopolitical headwinds, the data suggests that homebuyer confidence is holding firm - particularly among first-time homebuyers and in high-growth regions. As banks continue to compete for business and interest rates remain favourable, we anticipate sustained momentum in the residential property sector, underpinned by accessibility to finance, affordability and renewed consumer interest” concludes Dyer.
