Data from ooba Home Loans covering January to May 2025 shows a positive trend in home purchases, with rising incomes among loan applicants in most regions in the country.
Five out of nine provinces recorded year-on-year growth in average monthly gross income per applicant, signalling renewed strength in the residential property sector.
Tshwane led the pack with a 16.8% increase, pushing average monthly income to R78,099. The Eastern Cape followed with a 9.5% rise to R73,052. Meanwhile, the Western Cape maintained the highest average income at R82,797 but saw a slight 2.3% decline compared to the same period last year.
Nationally, average applicant income grew 2.4% to R68,039, reflecting steady demand amid changing market dynamics, said Rhys Dyer, CEO of the ooba Group.
“The affordability of housing is often measured by comparing house prices to household income with a lower ratio generally indicating greater affordability as the household could potentially afford a larger portion of the home’s price with their income,” Dyer said.
Price-to-income ratios highlight affordability challenges in key regions.
The Western Cape recorded the highest ratio at 28.6, meaning homes cost nearly 29 times the average monthly income of applicants. KwaZulu-Natal (24.8), Eastern Cape (24.7), Johannesburg (24.5), and Free State (23.3) followed, all showing slight declines in affordability.
However, affordability improved in Tshwane, Gauteng South & East, and Mpumalanga, where income growth outpaced rising home prices.
When looking at bond repayments relative to income, Limpopo emerged as the most affordable region, with repayments averaging 17.9% of gross income. The average bond size there was R1,294,535, with monthly repayments of R13,142 against an average income of R73,371.
Other regions such as Gauteng South & East, Tshwane, and Mpumalanga saw repayments around 20.3% of income, while Johannesburg’s stood slightly higher at 21.4%.
The Western Cape recorded the highest instalment-to-income ratio at 23.3%, driven by the province’s significantly larger average bond size of R1,901,806.
Regarding buyer demographics, the Eastern Cape had the oldest average buyer age at 42 years, likely influenced by secondary or holiday home purchases.
Limpopo’s first-time buyers were the oldest on average at 37.4 years, whereas the Western Cape attracted the youngest first-time buyers, averaging 34.2 years, despite having the highest average purchase price for first-time buyers at R1.75 million.
Dyer attributed the younger buyer profile in the Western Cape partly to a strong buy-to-let market. Investment demand there accounted for 30.5% of applications, more than double the national average of 12.6%.
Gauteng South & East housed the youngest overall buyers at 38.8 years and offered the second most affordable homes, although with relatively lower incomes averaging R53,655 per month.
“The interplay between income growth, purchase price trends and regional buyer profiles, coupled with a quick succession of interest rate cuts, underscores the potential for broader recovery and the transformation in the property sector; one that presents greater opportunities for buyers across the country,” Dyer concluded.
