In September 2024, the South African prime lending rate was reduced by 25 basis points, bringing it to 11.5%. While the property market had hoped for a larger cut, this reduction marked the start of a potential downward interest rate cycle, which could stimulate the home loan industry in 2025. Home loan activity has been declining for 13 quarters due to restrictive monetary policy, but Q3 2024 saw a slight recovery, with a 4.5% quarter-on-quarter increase in loan applications. However, applications have dropped by 31% since Q3 2021, after booming during the pandemic.

The average home purchase price increased by 6% year-on-year (YOY), reaching R1.12 million for buyers under 30. First-time buyers (FTBs) saw a 10% YOY drop in deposit requirements, though deposits for all buyers have risen by 3%. The prime lending rate remains 450 basis points above November 2021 levels, and inflation, now within the South African Reserve Bank’s target range, may lead to further rate cuts.

Regionally, the Western Cape continues to lead in home loan values, with Johannesburg’s North-Western suburbs overtaking Pretoria for second place. Mpumalanga also increased its loan values, while lower-priced property markets (under R1 million) faced sharp declines in approved loans. In contrast, higher price brackets saw significant growth, driven by buyers expecting future price increases as interest rates fall.