First-time homebuyer demand in South Africa is surging, driven by expectations of imminent interest rate cuts as inflation trends downward. Standard Bank reported that nearly half of all home loans registered in May were taken by first-time buyers, marking a significant recovery from the decline observed throughout 2023 and early 2024. This resurgence follows increased applications in April and May, reflecting growing optimism about the housing market.

The bank’s data shows a recovery in the first-time homebuyers’ market, which had dropped to 46% of total applications in the first quarter of 2024 according to the Ooba Home Loans’ barometer. To support these buyers, Standard Bank implemented measures including loans exceeding 100% of the purchase price to cover upfront costs. First-time buyers now qualify for up to 108% of the loan amount, subject to risk assessment.

Key trends noted by Standard Bank include that 48% of all bond registrations over the past five years involved first-time buyers, with an average loan value of R975,000. Four in ten first-time buyers provided a deposit, averaging 24% of the selling price. Gauteng, Western Cape, and KwaZulu Natal are the top provinces for first-time buyer activity.

Interest rate cuts are expected to further boost property demand. The Reserve Bank has maintained high rates to combat inflation, but with inflation expectations dropping, rate cuts could soon follow. The Bureau for Economic Research (BER) noted a decline in inflation forecasts across social groups, suggesting easing pressures. This potential reduction in interest rates may enhance affordability, stimulating the housing market and potentially driving up property prices as demand increases.