Looking for something different? Get in touch with us!

South Africa’s housing market set for a bright 2025

Staff Writer
Estimated reading time: 2 minutes

The suspension of loadshedding in March 2024, coupled with several fuel price cuts, lower inflation, and the formation of a Government of National Unity (GNU), has set the stage for a positive outlook in South Africa’s residential property market, says Dr. Andrew Golding, chief executive of the Pam Golding Property Group.

These milestones, along with the prospect of further interest rate relief, have spurred increased activity and interest in the housing sector, reflecting a more optimistic economic and political environment.

National house prices have already shown significant momentum, rising by 4.9% in September 2024. The May 2024 election marked a turning point for the economy, boosting business and consumer confidence, which in turn positively impacted the housing market.

Lower inflation, supported by five consecutive fuel price cuts, has eased pressure on household finances, while the first interest rate cut in September reduced the cost of servicing debt. Globally, inflationary pressures are subsiding, with major central banks, including the Federal Reserve, cutting interest rates.

This economic optimism is reflected in marginal upward revisions to growth forecasts and the potential for even stronger growth, he said.

Three key factors are influencing the housing market:

Encouragingly, the latter two factors have shown noticeable improvement in the second half of 2024 and are expected to continue improving into 2025, Golding said.

Although interest rate relief tends to impact the market with a lag, the September reduction of 25 basis points is expected to further enhance household finances, making homes more affordable and potentially boosting sales activity in 2025. Banks are also supporting the housing market with high approval rates, declining deposit requirements, and competitively priced home loans.

From January to September 2024, national house price inflation (HPI) averaged 3.5%, slightly exceeding 2020’s 3.47% and nearly matching 2022’s 3.82%. Depending on Lightstone’s later revisions, this could be the strongest price growth, aside from 2021, since 2016.

Notably, with the recovery in HPI gaining momentum and inflation easing, real HPI has been positive for two consecutive months. Golding said that inflation is expected to remain subdued for the next few years, and if the recovery in house prices continues, we could see a sustained period of real price growth, albeit in single digits, which hasn’t been observed since 2007.

Regionally, over the past decade, Western Cape house price inflation has outperformed other major regions and is currently stabilizing at higher levels. Meanwhile, HPI in both Gauteng and KwaZulu-Natal is rebounding, with all major metro markets showing signs of recovery.

The outlook for South Africa’s housing market in 2025 is bright, according to Golding, driven by a combination of economic stability, improved household finances, and strong demand.

Leave a Comment

Your email address will not be published. Required fields are marked *