SA Home Loans, the largest non-bank mortgage provider in the local market, predicts a year of a slow recovery for the property market in 2024, rather than a bounce back, with a cautious return of consumer confidence.
SA Home Loans (SAHL) CEO, Rob Kelso, says the interest rate cycle has been the dominant factor with the most significant cumulative tightening cycle in more than a decade and the most rapid rise in interest rates in more than two decades.
“This has resulted in strained affordability for new buyers and strained affordability for existing borrowers, with rising arrears on credit portfolios across the industry.
“In 2023, we saw a sharp fall in property and mortgage transactions, which were down in the region of 25% year on year, with the most strain evident in the heart of the market – those segments under R3 million. This is despite an environment where the credit supply side or bank appetite remained robust,” he added.
That said, he said this is a normal cyclical slowdown tied to interest rates, which will turn when interest rates stabilise and come down again.
Against this backdrop, SAHL celebrates 25 years as the pre-eminent mortgage specialists in the country. When the business was launched in February 1999, interest rates were at an all-time high of 23.5% and South Africans were decidedly cash strapped.
Today, SA Home Loans has financed homes for more than 300,000 South Africans to date, providing access to R170 billion in lending.
Despite the elections, load shedding and geopolitical factors, the economic signals for 2024 (and even more so 2025) are increasingly positive.
“Notably, the consumer price index (CPI) has moderated, and interest rates have likely peaked, and the consensus is for a round of steady, moderate rate cuts from mid-year,” said Kelso.
This will provide relief for consumers, with improved affordability and increasing confidence to access credit.
Kelso said that lender appetite is likely to remain robust, providing a strong base for market recovery.
“We are seeing the traditional bank lenders active and competitive in the market, as well as new entrants to the home loan market, in line with the emergence of new banks and the diversification of existing banks. Their presence is likely to continue to grow in prominence moving forward," he said.
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