Homeownership in South Africa is becoming more accessible as interest rates decline, reducing monthly bond repayments significantly. Experts note a drop in the prime lending rate since late 2023, offering substantial savings for potential buyers. However, prospective homeowners should carefully assess budgets and risks before entering the market.
The South African property market is showing signs of recovery in 2026, driven by lower interest rates that make home loans more affordable. Bradd Bendall, national head of sales at BetterBond, highlights that several key indicators support this trend. The prime lending rate has fallen by a cumulative 150 basis points since the end of 2023, bringing it to 10.25%.
For instance, the monthly repayment on a R2-million home loan over 20 years now stands at R19,633, down R2,000 from 2023 when the rate was 11.75%. This change translates to nearly R490,000 in interest savings over the loan's duration.
Despite these positives, buyers are advised to conduct thorough checks. Start with a budget that accounts for potential rate increases of 1% or 2%, alongside rising costs for petrol and groceries. Calculate total monthly expenses, including the bond, rates and taxes, levies, insurance, and maintenance, before seeking pre-approval.
Deposits for first-time buyers have decreased, but putting down less upfront could raise long-term interest and vulnerability to rate fluctuations. Ensure an emergency fund covers transfer costs and unexpected repairs, such as R15,000 to R30,000 for a geyser or roof leak.
Consider location carefully: high-demand areas offer quicker price appreciation but limited stock and higher entry costs, affecting future resale or rental potential. Properties with solar photovoltaic systems should be evaluated for electricity savings and outage backup, especially if planning to rent.
Timing the purchase is crucial. Further rate cuts might lower repayments but could drive up property prices and increase competition. Buyers must weigh locking in current prices against waiting for potentially cheaper debt on more expensive homes.
