Property Brief - May 2023

In May's Property Brief we see that the first four months of 2023 saw a marginal improvement in the number of new home loan applications. However, the property market is likely to remain subdued until interest rates stabilise and start going down again. The pandemic-induced dip in bond applications in Q2 2020 is plain to see on the graph below. So too, the spike that occurred immediately afterwards, due to pent-up demand and the initial easing of lockdown restrictions. After that, the upward trend in home loan applications continued for another four quarters until a modest decline set in when the Reserve Bank started raising interest rates.

The value of approved home loans staged a slight recovery during the first four months of this year with an increase of 1.8% over Q4 2022. Although modest, this rise demonstrates the resilience of homebuyers in South Africa, when viewed against the backdrop of a 60% increase in the prime lending rate during the current rate-hiking cycle of the Reserve Bank, which commenced in November 2021. It is not entirely surprising, however, when considered along with figures showing the increase in formal sector employment that occurred in 2022, totaling more than 1.2 million jobs.

The 12-month period ending April 2022 saw vibrant activity in the residential property market, with every BetterBond region in the country recording positive YOY growth in average approved home loan values. On the back of an interest-rate hiking cycle that commenced in November 2021, this trend was not sustained during the 12 months that followed. A modest increase was, however, recorded for the country as a whole, and five BetterBond regions also managed positive YOY growth.

The 12-month period ending April 2022 saw vibrant activity in the residential property market, with every BetterBond region in the country recording positive YOY growth in average approved home loan values. On the back of an interest-rate hiking cycle that commenced in November 2021, this trend was not sustained during the 12 months that followed. A modest increase was, however, recorded for the country as a whole, and five BetterBond regions also managed positive YOY growth.

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