Property Brief - July 2023

In this edition of Property Brief you'll learn that despite home loan application volumes coming down during the current Reserve Bank rate-hiking cycle, average home loan values have held their own. Compared to the previous 12-month cycle, the average home loan granted for all buyers was unchanged, and for first time homebuyers declined only marginally (by 2%). The average home loan for all buyers is currently just below R1.2 million, and for first-time buyers marginally above R1 million. This means the latter group of homebuyers is maximising the government’s increased transfer duty threshold, which was moved up to R1.1 million in February 2023. When we compare BetterBond regions across the country, average home loan values are 67% higher for all buyers and 61% higher for first-time buyers in the top-performing Western Cape, versus the North West province.

With interest rates at their highest levels in 15 years, it is not surprising that property market activity has become more subdued. Apart from an expected dip in the rate at which new home loan applications are being submitted, another predictable trend has been higher levels of homebuying activity in the lower price brackets. Between May and June this year, the share of home loans granted for properties costing less than R1.5 million has increased, while buying in all price brackets above R1.5 million has decreased. The biggest drop has been for homes priced above R3 million.

During the 12 months to June 2023, Gauteng continued to dominate home loan financed buying, with BetterBond’s Greater Pretoria and two Johannesburg regions accounting for more than 50% of all home loans granted, to all buyers and first-time buyers (figure 4). In terms of both groups of homebuyers, the Western Cape and KwaZulu-Natal recorded the next best levels of activity, respectively. In the current macroeconomic environment of subdued growth and higher debt-servicing costs, the property market is likely to remain somewhat constrained. However, the sharp decline in the Producer Price Index (PPI) is bound to filter through to the Consumer Price Index (CPI), which may lead to lower interest rates later this year or early in 2024.

All the editions of the Property Brief are available here for your reading pleasure.