South African Property in 2025: What Q1 Reveals About the Road Ahead

The South African property market began 2025 on a cautiously optimistic note. With inflation easing, interest rates holding steady with potential modest declines, and policy shifts making entry more affordable, the first quarter brought fresh energy into a market that showed resilience but little momentum in 2024. Drawing from Lightstone, BetterBond, and FNB data, Paul Stevens, CEO of Just Property, examines where the sector stands today and what we can expect from the rest of the year.

A look back: the slow grind of 2024

Last year, the market was shaped by economic pressure and buyer hesitancy. The FNB House Price Index recorded just 0.3% year-on-year growth in October, down from 0.5% in September. Gauteng, the country’s largest housing market, saw prices decline by 2.6%. Coastal areas in the Western Cape bucked the trend, buoyed by lingering semi-gration demand. Mortgage volumes began to pick up in Q4, with BetterBond noting a 6.6% year-on-year increase in applications and an 8.1% rise in home loans granted.

Rental markets outperformed expectations. National average rent grew by 4.8% year on year in Q3 2024, with the Western Cape leading at 9.3%. Tenant affordability improved, arrears dropped to near-record lows, and average rent remained below 30% of household income.

A fresh start: Q1 2025 insights

Lightstone’s Q1 2025 transfer data offers the clearest picture yet of post-pandemic market normalisation. The High Value segment (R700 000 – R1.5 million) accounted for the largest share of activity: 33.8% of volume and value. The Mid Value segment (R250 000 – R700 000) followed closely at 32.9% by volume, although its share of value was lower at 18.3%, reflecting affordability constraints.

First-time buyers remained active in these bands, with 16.9% buying into the High Value category and 16.4% into the Mid Value range. Notably, average spend among first-time buyers was R1.2 million in the High Value band and R557 000 in the Mid Value band, showing a strong middle-market entry trend. A small portion also bought into the Luxury segment (R1.5 million – R3 million), with an average spend of R2.2 million.

Regulatory shifts are supporting this momentum. From 1 April 2025, properties priced under R1.21 million were exempt from Transfer Duty Tax. This change, announced in the February Budget Speech, eases upfront costs for many buyers.

Transfer Duty, effective from 1 April 2025 (Source: Sars)

While the repo rate remained unchanged at 11% in the 20 March monetary policy announcement, the Deeds Office implemented a revised fee structure from 1 April, which includes a new lodgement fee (R50 per deed or document) and the requirement that all fees are now to be paid in advance.

Looking ahead: opportunity in the details

If inflation continues to slow, rate cuts may resume, enhancing affordability and spurring further buyer activity.

Recent announcements from the United States regarding increased tariffs on a range of imported goods could have indirect consequences for the South African property market. Should these tariffs lead to disruptions in global supply chains or increased costs for building materials – particularly those with components sourced internationally – developers may face tighter margins and delayed project timelines. Higher input costs could also place upward pressure on the pricing of new residential and commercial builds, especially in the mid to high-end segments. Investors and developers would do well to monitor this closely, particularly if their projects rely on imported finishes, equipment or construction technologies.

Here are my key takeouts for buyers, investors and developers:

• For first-time buyers: Properties under R1.21 million are now exempt from transfer duty, making this an ideal entry point. Consider the High Value segment for long-term appreciation, but factor in total transaction costs, including new deeds office fees.
• For investors: The rental market continues to perform well, particularly in the Western Cape. High demand, limited supply, and improved affordability create strong conditions for yield. Consider locations with low arrears and rising rent-to-income ratios.
• For developers: Keep an eye on supply chains for internationally sourced materials and fittings. Should costs increase, developers should see this as an opportunity to source new suppliers or revisit pricing structures.
• For commercial buyers: Industrial remains the most promising sector. Focus on logistics and light manufacturing hubs. Office property, while oversupplied, may offer long-term potential in niche or repositioned formats.
• For all buyers: Monitor inflation, interest rate decisions and potential policy shifts in the second half of 2025. These will shape affordability and investment timing.

With Q1 providing a solid start and policy adjustments enhancing affordability, 2025 may be the year the South African property market transitions from recovery to renewed growth.