Despite some signs of recovery in property prices, ooba Home Loans' Q2 2024 statistics indicate that real property price growth in South Africa remains constrained due to high inflation.
The national average purchase price has declined by 1.4% compared to Q1 2024, now standing at R1,458,924. Similarly, first-time homebuyers saw a 1.8% drop in the average purchase price, now at R1,150,238.
The Western Cape led the market with the strongest growth in Q2 2024 for both first-time and repeat homebuyers, recording nominal increases of 7.8% and 6.3% respectively, and was the only region to show real (inflation-adjusted) price increases.
Conversely, KwaZulu-Natal experienced the largest declines, with first-time and repeat homebuyer prices dropping by 6.3% and 7.2% respectively.
Regions showing a year-on-year nominal increase in average purchase prices include Limpopo, Free State, and the Eastern Cape, while Mpumalanga, previously a strong contender, has seen prices fall into negative territory.
South Africans aged 18 to 35 are increasingly viewing homeownership as a key wealth-building strategy. Data from ooba Home Loans shows that this age group has been spending more on property year-on-year, with the average purchase price increasing by 30% over the past five years.
Among these young buyers, those aged 26 to 30 showed the most significant annual growth in average purchase price at 4.2%.
In contrast, buyers aged 37 and older are paying 2.1% less in 2024 compared to 2023, reflecting the financial pressures leading some to opt for less expensive properties to manage monthly home loan repayments.
In the first-time homebuyer category, strong performers in average purchase prices include Gauteng South and East, Free State, and Limpopo, while the Eastern Cape, Tshwane, North West, and Mpumalanga have seen significant declines.
The Free State recorded the lowest average purchase price overall for Q2 2024 at R1.01 million.
Easing Deposit Requirements
The national average deposit has decreased year-on-year to R92,673 (6.4% of the average purchase price), down by 23.8% from Q2 2023’s average deposit of 8.4%.
The national average approved bond size has increased by 4.6%, surpassing the rise in the national average purchase price, which went up by only 2.3%.
For applicants aged 37 and older, loan-to-value (LTV) ratios have improved by 5.2% year-on-year, suggesting banks are offering more generous loans to stimulate market activity among this demographic.
First-time homebuyers are putting down larger deposits compared to second-time buyers.
Despite an 11% quarter-on-quarter decrease (now at 9.7% – R111,279), the average deposit paid by first-time homebuyers still exceeds the average for all homebuyers at 6.4% (R92,673), showing a 1% year-on-year improvement in this segment.
Bank approval rates have remained steady, with a slight year-on-year dip. The ratio of applications declined by one bank but approved by another has decreased from 45% in Q2 2023 to 43.7% in Q2 2024.
The Western Cape continues to lead the buy-to-let trend, driving the national surge in investment demand, with 32.4% of all applications in Q2 2024 for investment properties, up by 2% year-on-year.
Nationally, Q2 2024 saw the highest quarterly average (12%) for applicants purchasing investment properties, a 3% increase from 9% in Q2 2023.
The second-highest demand for investment properties comes from buyers aged 18 to 25, a trend that has been growing since 2022.
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