The 2024 South African Housing Market Report, published by think tank, The Centre for Affordable Housing Finance in Africa (CAHF), shows that the country's residential property market comprised 6.91 million properties, valued at R6.789 trillion, at the end of 2023.
Data from Lightstone, included in the report, also provides insights into South Africa’s residential mortgage market, covering market size and activity.
The total number of bonded transactions in 2023 stood at 110,498, reflecting a significant 25.5% decline compared to 2022, with 37,834 fewer transactions.
The number of bonded transactions has fluctuated in recent years, with factors such as COVID-19 and interest rates playing key roles.
After a slight 4.0% drop in 2020, the market rebounded in 2021 with a 33.2% increase, only to see a 5.8% decline in 2022, followed by the steep drop in 2023. However, the 2023 figure remains close to the average for the years 2012-2019.
High interest rates are a key factor in the decline in new bonds. The prime rate increased from 7.25% in early 2022 to 10.5% by year-end. In 2023, there were additional rate hikes, with the prime rate reaching 11.75% by mid-2024 as the Reserve Bank aimed to manage inflation.
Early data from the National Credit Regulator (NCR) suggests this trend is likely to continue, as mortgage lending in Q1 2024 fell by 18.71% compared to the same period in 2023.
The value of outstanding mortgages at the end of 2023 was R1.428 trillion, representing a modest 2.88% decline from the previous year.
Although the total value of mortgages has been rising, the number of outstanding mortgages has seen a gradual decline over the last decade. By the end of 2023, the number of mortgages had dropped to 2.241 million, which is 4% fewer than a decade ago.
In 2023, 53% of residential property transactions, including new and resale properties, were financed with mortgages. Resale properties dominate the bonded market, with nearly 80% of these transactions involving financing.
In the new-build segment, only 45% of transactions were bonded, largely due to many new homes being provided through government subsidy programs. Excluding these government-subsidized properties, about 69% of new builds are bonded.
Market segment analysis shows that bonding is more common in higher-value transactions. In 2023, only 6% of entry-level property purchases were bonded, while transactions in the R300,000 to R600,000 range had a 46% bonding rate.
Transactions valued between R600,000 and R3 million had bonding rates of 62%-64%. For resale transactions, approximately 30% of bonded transactions were for properties valued below R900,000.
According to the NCR, only 1.57% of mortgages granted in 2023 went to households earning less than R15,000 per month. However, there were some bonds issued for low-value properties, with 1,070 bonds for resale transactions under R300,000 and 349 for new builds in the same price range.
In terms of market share, Standard Bank led with 26% of all bonded residential transactions in 2023, followed by First National Bank (23%) and Absa (21%).
Over the past two years, FNB has increased its share from 17%, overtaking Absa. Despite a general decline in bonded transactions,
FNB and Nedbank experienced smaller decreases compared to their competitors. While all major banks were active across market segments, Standard Bank held the largest share in most segments, except for properties valued under R300,000, where Nedbank dominated.
The lower end of the property market also saw some mortgage activity, particularly in the R600,000 to R900,000 range, with nearly 25,000 bonded transactions in 2023.
Nedbank had a strong presence in this segment, highlighting a robust appetite for lending in lower-value property markets. In total, 36,981 bonded transactions were recorded for properties under R900,000 in 2023.
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