Tag Archives: Standard Bank

No-deposit home loans a warning sign among younger buyers in SA

South Africa’s residential property market is undergoing a generational shift, with individuals under the age of 35 – particularly first-time homebuyers – playing an increasingly dominant role.

This rising demand from younger buyers is pushing up property prices in key metropolitan areas and reshaping home financing trends, according to Standard Bank’s newly released Youth Barometer report.

Drawing on data from over three million clients aged 18 to 35, the report offers a deep dive into the financial behaviours of young South Africans, with a focus on homeownership, debt appetite, and affordability challenges.

The data reveals a significant trend: around 40% of all new home loan enquiries at Standard Bank now come from clients under the age of 35. Between January 2023 and April 2025, 74% of home loan applications were from first-time buyers—rising to an average of 76% since mid-2025.

This surge is not only driving demand but also prompting a shift in how and where younger buyers are entering the market.

This segment is critical for the bank, said a Standard Bank representative. It’s far more effective to grow with a client than to win them over later in life.

The Youth Barometer also sheds light on the financial strategies younger buyers are using to secure property in a high-cost environment. T

he average loan approval for buyers under 35 is R1.2 million, with 70% of these loans granted at loan-to-value (LTV) ratios of 100% or more – indicating little or no deposit. In comparison, older buyers average R1.5 million in loan approvals, with only 45% approved at full LTV.

The trend toward higher LTVs among young buyers reflects both a challenge and a strategy: limited savings for deposits, but a willingness to commit long-term. Three-quarters of young applicants also opt for 20-year loan terms, using longer repayment periods to reduce monthly instalments.

Standard Bank has responded by offering first-time buyers loans of up to 108%, subject to risk assessment—helping cover not just the property price but also the upfront costs such as transfer duties and legal fees.

While young buyers are managing to access the market, they’re doing so with tighter budgets. This is evident in their higher Instalment-to-Income (ITI) ratios, with many spending over 30% of their income on monthly bond repayments. While that demonstrates commitment, it also leaves less room for error in a volatile interest rate environment.

The rise in no-deposit home loans is also a warning sign. It suggests many young South Africans are unable to accumulate savings, and are instead relying more heavily on credit to achieve independence through homeownership.

Many of these buyers are stretching their affordability based on the expectation of higher future earnings, the bank noted. It’s a calculated risk—but one that underscores the importance of financial education and responsible lending.

Apartments and entry-level houses are in particularly high demand, especially in city centres and suburban hubs near major employment nodes. This shift is putting upward pressure on prices in metros like Johannesburg, Cape Town, and Durban, where stock is already constrained.

Standard Bank views this younger demographic as a feeder market for future high-net-worth clients and is shaping its products and services accordingly. The bank says it’s focused on supporting this group not only with credit but also with financial literacy tools to help manage debt and prepare for future expenses.

The under-35 segment is now one of the most dynamic forces in South Africa’s residential property landscape. While affordability remains a challenge, the appetite for homeownership is strong – and growing.

For banks, developers, and policymakers alike, the message is clear: the next generation is ready to buy, and they’re reshaping the market in the process.

South Africa’s real estate sector showing its teeth in 2025

2025 has begun with marked volatility, shaped by sharp market fluctuations, shifting geopolitical landscapes, and persistent macroeconomic pressures, notes Standard Bank.

The South African real estate sector has not been insulated from these broader dynamics, according to Simon Fiford, senior VP, Real Estate Coverage at Standard Bank.

“Often misunderstood and seen as a monolith, the sector comprises multiple, highly differentiated asset classes: office, retail, residential, industrial and alternative real estate assets-including data centres, cold storage facilities, and student accommodation, among others.”

Across these categories, performance has varied, stated Fiford. As the largest African bank by assets Standard Bank said that despite macroeconomic challenges, the real estate sector has shown notable resilience.

Beyond global pressures, the real estate market contends with persistently high interest rates, the lingering effects of the post COVID-19 recovery, and muted domestic growth in South Africa. These factors have impacted each asset class differently.

Office

Office rentals have shown surprising resilience. The national weighted decentralised vacancy rates for grades A+, A and B office space decreased to 12.6% in Q4 2024, down from 14.4% in Q4 2023.

The shift back to physical workplaces has gathered momentum, as hybrid fatigue sets in, and companies prioritise in-person collaboration.

Globally, firms such as Amazon, IBM, JP Morgan Chase, Tesla, Zoom, and Google have implemented return-to-office mandates.

“Locally, we’ve observed a similar trend: more businesses are encouraging employees to return to office environments, driven by benefits like faster onboarding of new hires, enhanced collaboration, more effective strategic planning and execution,” said Fiford.

Retail

The real estate expert said that the retail sector has experienced a remarkable recovery. “Footfall and occupancy rates have now surpassed pre-pandemic levels in several key African markets.”

The asset class is also seeing low vacancy rates (5.5% FY 2024), as well as increased adoption of solar PV initiatives which are being used to manage operational costs, he said.

Standard Bank recently issued a renewable bond with the aim of providing access to affordable sustainable funding for such projects, which ultimately relieve pressure on electricity grids.

“Furthermore, we have witnessed the rise of urban consolidation which has led to innovative precinct developments, which blend residential, retail, and cultural spaces in one environment,” said Fiford.

Residential

He said that the structural undersupply of affordable housing in the country remains a challenge. Citing the Centre for Affordable Housing Finance in Africa, Fiford noted that the total value of South Africa’s residential property market reached R6.9 trillion in 2024, encompassing 6.91 million properties.

Residential assets represent 89.3% of total property volume, underscoring their centrality to household wealth.

“Importantly, government-subsidised housing (GSH) makes up 32% of total residential units, or about 2.18 million homes. This indicates massive potential for scalable investment and impact.” Fiford said that Standard Bank continues to support clients like Calgro M3 with sustainable finance solutions to support developments such as the Bankenveld District project in Sandton.

“Encouragingly, the residential market is showing lower vacancy rates, increased investment in build-to-rent and build-to-sell developments, and a steady rise in rental yields.”

Industrial

The standout performer across the board continues to be the industrial sector. This asset class benefits from booming e-commerce, the reshoring of supply chains, and demand for warehousing solutions.

Vacancy rates have dropped by 2.1%, while rental growth has exceeded 5% year-on-year.

“We are also seeing a surge in tenant-driven developments and sale-and-leaseback structures, enabling manufacturers to remain focused and unlock capital to invest in core operations,” said Fiford.

Alternative Assets

Data centres, cold storage, and student accommodation continue to emerge as strategic sub-sectors, said Fiford.

Their rise speaks to shifts in technology, food logistics, and urbanisation, pointing to new investment opportunities, he said.

Relevance of Physical Real Estate

According to Standard Bank’s internal estimates, the South African commercial real estate sector is currently valued at approximately R1.9 trillion.

This represents a significant increase from the R1.3 trillion recorded in 2015, highlighting the sectors growth over the past decade. If we add to this the estimated value of the residential property market (R6.9 trillion) the market size exceeds R8.8 trillion (as of end of 2024).

Standard Bank stressed that these valuations may not fully capture the entire market, as certain segments like government-owned properties, hospitals, hotels, and multi-dwelling residential units might be underrepresented in municipal data.

Standard Bank points to sweet spot in South Africa property market

Affordable housing in South Africa is on the up, with consistent demand for properties priced between R350,000 and R700,000.

Standard Bank has observed a double-digit increase in activity within this market over the past four years, driven by continued urbanisation and an increasing need for accessible housing in metropolitan areas.

“This segment continues to show resilience, particularly in Gauteng and the Western Cape, where demand remains strong despite economic pressures,” said Toni Anderson, head of Standard Bank Home Services.

Households earning up to R30,000 per month are the primary buyers of affordable homes. While the uptake of sectional title homes has more than doubled in the past four years compared to the four years leading up to 2020, the majority of buyers still prefer full-title, standalone houses.

“These are likely to be on the outskirts of key metros, but strong sales suggest buyers are willing to make that trade-off for full-title homes,” said Anderson.

Provinces including KwaZulu-Natal and the North West have also experienced rapid growth in home loan uptake for affordable housing, but Gauteng continues to dominate the market. In the four years leading up to February 2025, Gauteng accounted for 47% of all affordable housing loans issued by Standard Bank—a trend that was evident even before the pandemic.

However, demand for affordable housing goes beyond traditional markets. Despite rising house prices, the Western Cape has remained active in the affordable housing sector, a trend it shares with Gauteng. Over the four years leading up to February 2025, the Western Cape accounted for 18% of all affordable housing loans issued by Standard Bank, with KwaZulu-Natal ranking third at 12%.

“When you look at the Western Cape and Gauteng, you see significant private sector investment in affordable housing projects and urban development. This has spurred growth and created more opportunities for first-time homebuyers who typically seek properties in this price range,” said Anderson.

Many Standard Bank customers take out just one affordable housing loan, but a growing number are accessing additional funds for home improvements or expansions—indicating that these purchases serve as entry points for buyers with greater aspirations.

For first-time buyers, the bank offers up to 108% bond financing to cover upfront costs such as registration and transfer fees. It also provides re-advances, making it easier for customers to access funds for home improvements or expansions. These re-advances are simpler than applying for a new home loan, and the funds become available once all requirements are met.

In recognition of its significant role in the market, Standard Bank has been ranked Africa’s Most Valuable Banking Brand for 2025 in Brand Finance’s Global 500 Banking Brands report. Earlier in March, the bank was also named South Africa’s Most Valuable Banking Brand in the South Africa Top 100 Brands report.

This accolade marks the fourth consecutive year that Brand Finance’s annual ranking of the Global Top 500 Banking Brands has acknowledged Standard Bank, reflecting its consistently high standing, according to the bank.

Each year, Brand Finance evaluates 5,000 of the world’s biggest brands, publishing nearly 100 reports that rank brands across various sectors. The world’s top 500 most valuable and strongest banking brands are featured in the annual Brand Finance Global 500 Banks ranking.

Kenny Fihla resigns from Standard Bank to join Absa as CEO

Kenny Fihla, a prominent figure in South African banking, has announced his resignation from Standard Bank to take on a new role as the chief executive officer (CEO) of rival financial institution Absa Group.

His appointment to the position is effective from 17 June 2025, subject to regulatory approval.

Fihla held various senior roles within Standard Bank, including CEO of Corporate and Investment Banking (CIB), deputy CEO of Standard Bank Group, and CEO of Standard Bank South Africa. As deputy CEO, Fihla was responsible for overseeing Standard Bank’s subsidiaries outside of South Africa, further strengthening his Pan-African banking expertise.

“Kenny is a recognised leader with substantial Pan-African banking experience and a proven track record. He has almost 20 years of experience in leadership roles in banking,” said Absa in its statement.

Fihla holds an MSc in Financial Economics from the University of London and an MBA from the University of the Witwatersrand.

In a related development, Absa confirmed that Charles Russon will continue as the Interim CEO of both Absa Group and Absa Bank until 16 June 2025. Russon will work closely with Fihla during the leadership transition to ensure a smooth handover.

Following Fihla’s appointment, Russon will take on a senior role within the Group Executive Committee.

Meanwhile, Standard Bank announced that Fihla’s resignation comes after 18 years of service to the group, with his final day in office set for Friday, 13 June 2025. He will step down as both an executive director of Standard Bank South Africa and a member of its associated board committees.

Additionally, Fihla will resign as non-executive director and chairman of ICBC Standard Bank Plc and Stanbic Africa Holdings Limited, respectively.

CEO of Standard Bank Group Sim Tshabalala said in a statement early on Monday that Fihla will proceed with garden leave today. “Whilst this is a heavy blow for us, the Group is blessed with a surfeit of talent and deep succession pools.”

Standard Bank also confirmed that succession planning for Fihla’s role would be announced in due course. Fihla’s departure will mark the end of an era, but the bank’s leadership transition plans will ensure continued stability.

Bleak outlook for interest rates in South Africa

Standard Bank says that inflation in South Africa is expected to remain well anchored in the target band of 3% to 6% and interest rates are expected to decline to 7.25% – representing one more 25 basis points interest rate cut in March 2025 – and then remain flat for the rest of the year.

“This, together with ongoing policy reform and improved business and consumer confidence, will support economic growth,” the bank said.

Economic consensus suggests a potential interest rate cut of between 25 and 50 basis points for the remainder of 2025, with the South African Reserve Bank (SARB) scheduled to meet again on 20 March.

Inflation increased slightly to 3.2% year-on-year in January, up from 3.0% in December, but remains well within the Reserve Bank’s target range of 3% to 6%.

South Africa’s real GDP growth is projected to rise to 1.7% in 2025, with expectations to exceed 2.0% by 2026, according to Standard Bank.

The International Monetary Fund (IMF) forecasts South Africa’s GDP to grow by 1.5% this year, with a slight uptick to 1.8% by 2030.

It said that if South Africa continues to implement structural reforms in the electricity, logistics, and business enablement sectors, the country could potentially achieve a 3% growth rate in GDP.

If inflation rises due to his global trade policies, the South African Reserve Bank may adopt a more hawkish stance on interest rates to curb inflationary pressures. In response, investors could take a wait and see approach, holding off on decisions until the impact of Trump’s policy moves becomes clearer.

Standard Bank on Thursday (13 March) reported R45 billion of headline earnings and a return on equity of 18.5%. This performance, it said, was underpinned by continued balance sheet growth, lower credit impairment charges and flat costs in the banking franchise and a robust performance in Insurance & Asset Management.

Sim Tshabalala, Standard Bank Group CEO said: “Our performance in 2024 reflects the strength of our diversified business and our commitment to delivering value to our stakeholders. We have seen double-digit earnings growth in South Africa, good contributions from our insurance and asset management business, and a strong operational performance from Africa Regions. The group remains on track to deliver on its 2025 strategy and targets.”

Operational Achievements

-Active clients: Increased by 4% to 20 million
-Retail transactional clients in South Africa: 64% of clients are digitally active
-Digital revenue from retail clients in South Africa: Grew by 36%
-Mobile app logins by retail clients in South Africa: over 130m per month
-SME mobile banking volumes: Grew by 10%

The South African franchise delivered double-digit earnings growth in 2024, supported by increased client activity and improving credit trends. The formation of the Government of National Unity and stabilisation of electricity supply boosted consumer and business confidence, the lender said.

The group said its focus on digital transformation led to a 6% increase in digitally active retail clients, enhanced customer experience and operational efficiency.

The Insurance and Asset Management business recorded a strong performance, with headline earnings growing by 17% to R3.3 billion. Assets under administration and management in the South African asset management business increased by 13% to R1.1 trillion, driven by positive net external third-party customer inflows and favourable investment market movements.

Outlook

For the twelve months to 31 December 2025 (FY25), the group said its three core metrics are as follows:

-Banking revenue growth of mid-to-high single digits in ZAR;
-Banking revenue growth slightly higher than operating expenses growth, resulting in a marginally declining cost-to-income ratio year on year; and
-Group ROE will remain well anchored in the group’s 2025 target range of 17% to 20%.

“We remain highly positive about Africa’s growth outlook, and we are confident in our ability to continue to manage risk efficiently, and to balance growth and returns. Our strong capital position and diversified earnings streams provide us with the flexibility both to fund growth opportunities and to pay dividends,” said Tshabalala.

Winds of change: Standard Bank points to big shift in renewables market

Standard Bank has closed a R4.9 billion deal for the 140MW Ishwati Emoyeni Wind Farm project, located near Murraysburg in the Western Cape.

A first of a kind project has reached financial close and entered construction with Standard Bank as sole mandated lead arranger.

The 140MW Ishwati Wind Farm was led, co-sponsored and developed by Africa Clean Energy Developments (ACED), with the African Infrastructure Investment Managers (AIIM) managed IDEAS Fund and Reatile as shareholders.

The R4.9 billion wind project, was the first sizeable renewable energy project to sign a GPPA (Generator Power Purchase Agreement) with renewable energy aggregator, NOA.

The wind farm will comprise 32 Vestas 4.5MW wind turbines, each standing 120m high, and started construction in September 2024 and will start generating electricity in 2026.

The power generated by the ACED-EIMS-IDEAS-Reatile generation consortium will be sold to NOA under a long-term power purchase agreement, enabling NOA to supply multiple business customers through shorter, more flexible arrangements.

“In the case of Ishwati, wind power generated in the Western Cape, will be wheeled through the Eskom transmission network and then transmitted to end users such as Tronox, MMC, Old Mutual Properties, Netcare and others,” said Karel Cornelissen, CEO of NOA Group.

“NOA is facilitating not wind or solar energy to end users but rather a profile of green electrons achieved by aggregating multiple generators (wind, solar and battery projects) and providing this to multiple end users under more flexible arrangements” said Standard Bank Executive: Project Finance, Energy and Infrastructure Finance Sherrill Byrne.

Standard Bank pointed to a big shift in the market, most notably the change in reform in line with the amendments of the Electricity Regulatory Act. This has provided room for more flexible power generation options through aggregators.

The lender has been mandated for four renewable power aggregators in South Africa. These aggregators source renewable energy from various generation assets, such as wind and solar, and sell it to multiple off-takers.

Additionally, Standard Bank said it aims to achieve net zero carbon emissions from its own operations by 2040 and from its portfolio of financed emissions by 2050, aligned with the Paris Agreement.

How Cape Town’s adaptability is shaping its rise as semigration and investment hub

Cape Town is a prime destination for businesses looking to relocate or expand. With its robust economy, highly skilled workforce, affordable operating costs, exceptional quality of life, and a business-friendly environment, the city offers an ideal setting for companies of all sizes to grow and thrive.

The city is increasingly recognised not only for its stunning landscapes and world-class wine but also for its dynamic commercial property market and emerging position as a business hub.

Over the years, the city has evolved to meet the needs of modern businesses, becoming a key player in South Africa’s economy.

An increasing number of businesses are also “semigrating,” as affluent individuals and families seek improved living conditions, better service delivery, and a healthier work-life balance.

David Arton-Powell, head of broking at Galetti, highlights that Cape Town’s commercial property market is full of opportunity despite its unique challenges. “Cape Town’s commercial property market has always had unique challenges, but it’s also packed with opportunity. What we’re seeing now is a shift in how spaces are being used and the value tenants place on travel time, location, and adaptability.”

The city’s Central Business District (CBD), once dominated by government offices, has undergone a significant transformation. Today, the CBD is a vibrant mix of business, retail, and residential spaces. “Today’s CBD is very different from what it was even 10 years ago,” said Arton-Powell. “You have creative agencies, co-working spaces, premium offices, and even lifestyle developments all within the same block.”

This change reflects a growing demand for office spaces with added amenities, like coffee shops and green spaces, to enhance employee experience.

Meanwhile, areas like Woodstock and Century City are also emerging as key business hubs. Woodstock attracts creative startups with its industrial charm, while Century City offers businesses a convenient, all-in-one solution for office, retail, and residential needs.

Cape Town’s commercial property market has had to adapt to significant shifts in how businesses operate. “We’ve seen landlords and tenants adapt in ways we couldn’t have imagined. Flexible leases, shared workspaces, and creative use of older buildings have all become part of the norm.”

This flexibility is now a key driver in the demand for office space, with businesses prioritizing adaptable spaces that align with their culture and operational needs.

Looking ahead, sustainability and technology will play a critical role in shaping Cape Town’s business environment. “Green buildings are no longer a nice-to-have; they’re becoming a must-have,” said Arton-Powell.

As businesses seek spaces that align with their sustainability values, Cape Town’s growing focus on green and energy-efficient buildings will meet this demand.

Additionally, mixed-use developments are gaining traction, integrating offices, retail, and residential spaces in one location. These developments cater to the increasing demand for urban areas that offer convenience, walkability, and a higher quality of life.

The city has also emerged as a key player in South Africa’s venture capital (VC) landscape. The Western Cape accounted for nearly half (49%) of the country’s total VC activity in 2023, with R3.28 billion in capital flowing into local startups, particularly in the tech sector. This marked the highest total investment in VC in South Africa in 14 years.

Findings by the Southern African Venture Capital and Private Equity Association (Savca) showed that capital flow to SA start-ups in 2023 reached R3.28 billion, driven by investment into local technology businesses.

Active portfolios containing Western Cape-based companies dropped marginally from 53.7% in 2022 to 49% in 2023, by value. By deal volume, it was steady at 55.6%. Cape Town’s thriving tech scene, supported by local and international investors, has earned the city the nickname “Silicon Cape.”

Gauteng, dominated by Johannesburg, was second at 30.4%, comprising 32.6% of all deals by number.

Cape Town’s appeal is further enhanced by its ability to host a wide array of prestigious events throughout the year, according to Cliff Mayinga, provincial head for Coverage Business Banking (Western Cape), Standard Bank Business and Commercial Banking.

The city’s annual influx of international and domestic visitors creates substantial opportunities for small local businesses to benefit from increased economic activity across sectors such as hospitality, logistics, catering, and tourism services.

“Cape Town’s repeated recognition on the global stage reflects its enduring charm and vibrant ecosystem. For small businesses, this acclaim, combined with the many events hosted throughout the year, offers the chance to collaborate, innovate, and contribute to broader economic activity, including much-needed job creation,” said Mayinga.

For small and medium enterprises (SMEs), Cape Town’s growing international profile provides opportunities to expand their footprint. Local entrepreneurs can develop bespoke products, establish new supply chains, and offer uniquely South African experiences that attract both tourists and investors, the lender said.

Digital banking and payment platforms also empower SME’s to operate efficiently, while tailored merchant solutions make it easier for businesses to cater to the growing influx of international and domestic visitors.

Further, working capital and trade finance solutions ensure businesses can manage cash flow during peak periods and expand into export markets.

Sector-specific financing, such as for agriculture, hospitality, and tourism, supports businesses that play a crucial role in Cape town’s economy.

Sustainability-focused financing also helps local enterprises transition to eco-friendly practices, aligning with Cape town’s reputation as a global ecotourism destination.

South Africa’s emerging middle class battles debt and inflation pressures

South Africa’s working class is now the fastest-growing segment of the population, with millions of households moving up from poverty or the working poor.

However, breaking into the middle class has become increasingly difficult.

A recent study by the UCT Liberty Institute of Strategic Marketing, commissioned by Liberty and Standard Bank, reveals that 1.2 million households have joined the working class in the past decade.

This segment is defined as households earning between R8,000 and R22,000 per month.

These households, which represent a quarter of South Africa’s population, are largely made up of individuals with some tertiary education. Despite having dual incomes in some cases, their earnings still fall below R22,000.

Low economic growth, high debt, and limited resources impede their upward mobility, the lender said.

“Formal education has helped many move towards the middle class, but the working class faces a highly unstable journey. Retrenchments, short-term work contracts, or the death of a breadwinner can quickly push households back into poverty,” said Motlatsi Mkalala, executive head of middle market at Standard Bank.

Despite a combined annual spending power of R550 billion and 300 new working-class households emerging daily, per capita spending remains low.

Many working-class families support extended family members and spend more on essentials such as food as inflation continues to rise.

Commuting is also a heavy burden, with many spending an average of two hours daily traveling to work. For some, both travel time and transport costs have doubled.

To cope with these financial pressures, many are turning to debt. As a result, only 34% of working-class consumers surveyed feel financially stable, compared to 69% of middle-class earners.

“These challenges highlight the need for accessible tools that provide real-time insights into spending habits and help the working class make informed financial decisions daily,” said Mkalala.

Standard Bank’s data showed that almost half of salaried South Africans are left with less than R1,000 or face negative balances by payday. Middle-income earners make up the largest group affected.

The bank analysed data from over 402,000 individuals who receive their salaries on typical pay dates. On the day before payday, 21% of individuals had less than R1,000 in their accounts, while 28% had negative balances or relied on overdrafts.

Only half of the individuals had more than R1,000 in their accounts.

Even higher-earning South Africans are feeling the pressure, with emerging middle-income earners being the highest proportion of customers with less than R1,000 or in overdraft.

Standard Bank said that the research underscores the need for sustainable credit solutions to protect this segment from exploitative lending.

Debtbusters’ Q4 2024 Debt Index found that in 2024, consumers remained proactive in managing their credit, with debt counselling inquiries up by 8% and online debt management rising by 9%.

While interest in debt counselling was somewhat muted compared to previous years, demand is expected to increase in 2025 as consumers strive for financial sustainability.

Despite improved financial confidence, some trends persist. Income growth, though better than in previous years, still lags behind rising expenses: electricity tariffs have increased by 135%, petrol by 72%, and inflation by 44% since 2016.

As a result, consumers seeking debt counselling in Q4 2024 used 68% of their take-home pay to service debt.

A large portion of these individuals had personal loans (82%) and payday loans (52%), relying on short-term credit to supplement income.

Key findings for Q4 2024 debt counselling consumers:

-Purchasing power: Real incomes have effectively decreased by 42% since 2016, factoring in inflation. However, those earning R35k+ p.m. saw a 10% nominal increase in income.
-Debt burden: On average, consumers spent 68% of their income on debt service, the highest since 2017. For those earning R35k+, this rose to 74%. -Vulnerable consumers earning R5k or less spent 75% of their income on debt.
Unsecured debt: Unsecured debt levels were 29% higher than in 2016, with those earning R35k+ p.m. carrying 60% more unsecured debt.

Since 2016, average unsecured loan size increased by 29% whereas the volume of new unsecured loans declined by 27%.

This means larger unsecured (personal) loans are being granted to a smaller number of consumers, highlighting that risk is being concentrated on an ever-smaller group of consumers, BebtBusters noted.

SA banking sector responds to alleged discriminatory lending practices

The credit lending process in South Africa remains a contentious issue, with major banks under scrutiny for perceived biases in their lending practices.

On Tuesday, a joint meeting of the Portfolio Committee on Trade, Industry and Competition and the Standing Committee on Finance examined the state of transformation in the country’s financial sector.

The meeting also addressed ongoing concerns over discriminatory lending practices, particularly in relation to the country’s black population.

Standard Bank CEO, Kenny Fihla, highlighted a critical barrier to black South Africans accessing credit: the lack of an asset base that they can leverage when applying for loans.

“Credit decisions are by their nature discriminatory. Africans do not have an asset base one could leverage,” said Fihla, explaining the financial exclusion that many black South Africans face.

The meeting saw representatives from major banks, including ABSA, Capitec, FNB, Standard Bank, and Investec, join the session, along with regulators such as the South African Reserve Bank, the Prudential Authority, and the Banking Association of South Africa (BASA).

The discussion focused on issues such as account closures, high fees, and lack of progress in transforming the sector.

Committee member Lufefe Mkutu argued that the banking system was structured to serve the interests of South Africa’s white minority, a legacy of the apartheid era that has yet to be fully addressed.

“Fundamentally, we have not been able to transform these institutions. The post-1994 era was about managing the economic patterns and not changing the ownership patterns. We should ensure there is meaningful transformation,” he said.

Co-chairperson Dr. Joe Maswanganyi echoed these concerns, arguing that the banking sector must be held accountable for its failure to meet transformation targets.

“Over recent decades, South Africa has undertaken substantial legislative and policy initiatives aimed at reforming the financial sector to facilitate meaningful participation by historically disadvantaged groups.

“Nevertheless, despite these interventions, progress has been sluggish, fragmented, and often characterised by symbolic rather than substantive changes,” Dr. Maswanganyi said.

Mkutu also criticised the high interest rates charged to small, micro, and macro enterprises, particularly black entrepreneurs who lack collateral.

He further argued that banks were exacerbating inequality by failing to invest in quality education and criticized racial profiling in lending.

The Chairpersons expressed a desire for a broader follow-up meeting with the financial sector, including the insurance sector and the Public Investment Corporation, to discuss the role of bank owners in shaping the financial landscape.

“The discourse today must transcend rhetoric. The expectation for the implementation of actionable measures is paramount,” Dr. Maswanganyi said, suggesting that Parliament may consider legislative interventions if necessary.

BASA managing director Bongiwe Kunene responded to the criticisms by pointing out that the banking sector’s contributions to transformation.

“Already, banks’ financing of transformation and inclusive economic growth far exceed what is required of them by legislation and banks are likely to be able to do much more if there is a supportive operating environment for business and an expanding economy,” said Kunene at the launch of Basa’s transformation report for 2024 on Wednesday.

The report shows that banks have made significant progress in meeting the Amended Financial Sector Code (FSC) targets.

Black ownership in banks has reached 38%, surpassing the target of 25%, while black economic interest stands at 29%.

In terms of management diversity, 90% of junior managers are black, exceeding the 80% target.

While banks are making strides at junior and middle management levels, senior management diversity remains below target.

Banks’ financial contributions to empowerment financing have also surpassed expectations, with R337 billion in financing in 2023—more than three times the FSC’s target of R130 billion.

This financing has been directed towards affordable housing, transformational infrastructure, and black small and agricultural businesses.

Despite the progress, South African banks continue to face pressure from regulators and lawmakers to accelerate transformation, with growing calls for accountability and more tangible changes in ownership, management, and lending practices.

Why South Africans are selling their homes – a breakdown by price band

FNB data indicates a gradual yet steady recovery in the housing market, though financial pressures persist across most price segments for consumers.

In December, house prices grew by 0.9% year-on-year, slightly down from the revised 1.0% in November.

This brings the annual average growth to 0.8%, in line with expectations, though below the 1.5% growth seen in 2023.

FNB’s proprietary market strength indicators suggest that improving demand, combined with shrinking supply, is creating a favourable environment for property values.

However, despite these positive trends, real house prices remain below their potential, reflecting continued buyer caution—likely a result of the enduring effects of the cost-of-living crisis.

Looking ahead, FNB forecasts house price growth to accelerate to 1.7% in 2025, with the potential to surpass 3% by 2026.

This optimism is supported by easing inflation, lower borrowing costs, and a rebound in consumer sentiment.

The South African Reserve Bank reduced the repo rate by another 25 basis points last week, bringing the prime lending rate down to 11%. This marks the third rate cut since September 2024.

The recent cuts, particularly those introduced at the close of 2024, appear to be having a positive effect on the residential property market.

Standard Bank reported a notable increase in home loan applications between Q3 and Q4 of 2024, signalling a rebound in buyer sentiment and a recovery in property market activity.

The FNB Estate Agents Survey for the fourth quarter of 2024 further underscores market normalisation.

Activity ratings rose to 6.0 (out of 10)—the highest since Q4 2022—driven by increased activity in the middle-to-high-price segments and broad-based regional recoveries, particularly in KwaZulu-Natal and Gauteng.

However, overall sentiment was mixed, with agent satisfaction slipping slightly to 61% from 62%. This indicates ongoing affordability pressures in lower-price segments.

The average selling time for properties has decreased slightly, now at 11 weeks, with the R2.6–R3.6 million price range seeing the most notable improvement. Financial pressure remains a key factor influencing sales, with 26% of transactions driven by financial stress.

However, most sellers facing financial strain are opting to downsize rather than rent out their properties. Emigration-related sales have declined to 5%, while upgrading activity has risen to 12%, signalling early signs of recovery in the higher-end property market.

The housing market shows positive signs of recovery, including improved sentiment, shorter selling times, and a notable uptick in activity within the middle-to-high-price segments.

However, affordability issues and the lingering effects of the cost-of-living crisis continue to impact the more affordable segments of the market, FNB said.

Financial pressure remains a dominant factor, but easing inflation and borrowing costs are expected to provide gradual relief, the financial services firm said.

As market conditions improve, the foundation is being set for a more sustained recovery. Despite ongoing challenges, the positive momentum suggests that the housing market is on track for a stronger performance in the years ahead.