After two years of pressure on household budgets and borrowing power, South Africa’s homeowners may finally be seeing a turning point. South Africa’s broad-based economic rebound is translating into renewed momentum in the housing market, says BetterBond, with job creation, record vehicle sales and a surge in approved building plans driving growth across multiple sectors.
“Undoubtedly, the most encouraging news for homeowners at the end of last year was the Reserve Bank’s decision in November to cut the prime lending rate by a further 25 basis points – making it 150 basis points lower than it was in September 2024,” says Bradd Bendall, BetterBond’s National Head of Sales. This coupled with a robust rand which started the year trading at a level last seen in 2022, makes for a positive start to the new year.
Consumer confidence
Lower interest rates eased financial pressure for many households last year, Bendall notes. The Altron FinTech Household Resilience Index (AFHRI) illustrates the inverse relationship between interest rates and household financial health. When the prime lending rate fell to record lows in 2020, the index increased by more than 9%. Sharp interest rate hikes two years later had the opposite effect, as households struggled to service rising debt costs. “Many consumers had to curb spending and limit credit, which impacted home loan activity,” says Bendall. More recently, however, several cuts to the prime lending rate have contributed to a gradual recovery in household resilience, with a 2.3% improvement year-on-year reported by the second quarter of 2025. Confirmation from the Department of Mineral and Petroleum Resources that fuel cuts come into effect this week will provide further financial relief.
Record vehicle sales
Improving household confidence is evident beyond the property market. While BetterBond’s latest index shows a 16% year-on-year increase in home loan applications, vehicle sales also point to strengthening consumer demand. As reported in the BetterBond Property Brief, new vehicle sales rose by 16.8% year-on-year to a record 56 000 units. Despite ongoing tariff pressures, the value of vehicle and component exports reached a record high in the third quarter of 2025, according to data from the Drive.co.za Motor Index (DMI).
Strong GDP growth
These indicators, together with the reported real GDP growth rate for the third quarter of 2025 – a 2.1% year-on-year increase and the highest annualised rate in three years – have set the scene for a strong start to 2026. “Hopefully, renewed GDP growth will lead to repo rate stability and further job creation,” Bendall adds. “Already, as noted in BetterBond’s December Property Brief, Statistics SA has reported that the economy added a quarter of a million new jobs during this period, of which 65% were derived from the private sector.”
Commodities shine
Commodity markets are also playing a supportive role. Historically, the gold and platinum industries have been strong contributors to job creation, foreign exchange earnings and tax revenues, and the current price surge is exceptionally positive for South Africa. According to BetterBond’s latest Property Brief, gold reached an all-time high of $4,358 per fine ounce on 20 October, while platinum hit a 12-year high of $1,755 on 16 October. Combined with other metals and minerals, commodities currently account for 44% of the country’s export earnings.
Renewed investor confidence
Investor confidence has also received a boost following South Africa’s removal from the Financial Action Task Force (FATF) grey list in October last year. In November, S&P Global Ratings upgraded the country’s long-term foreign currency sovereign credit rating – the first such lift in more than 16 years – signalling reduced perceived risk on government bonds.
Building the economy
The construction sector’s recovery further reinforces the improving outlook. The recent double-digit quarter-on-quarter increase in construction activity is closely aligned with conditions in the residential property market, notes Bendall. According to the Afrimat Construction Index, the third quarter of 2025 saw strong performances across several indicators, including the value of buildings completed, the volume of building materials produced and the value of approved building plans.
“These indicators reflect improved household spending power fuelled by easing inflation, a firmer rand, lower interest rates and credit rating upgrades,” says Bendall. “BetterBond’s December index shows that since bottoming out towards the end of 2023, the volume of home loan applications has increased by 23.5%.”
Fundamentals drive growth
Taken together, these strides point to an economy that is not only recovering, but regaining resilience across key growth sectors, says Bendall. “This lays a critical foundation for sustained demand in the housing market. As employment levels improve, consumer balance sheets strengthen and confidence returns, property demand is increasingly being driven by economic fundamentals rather than short-term sentiment.”
With interest rates easing, credit becoming more accessible and activity rising across construction, manufacturing and exports, the residential property market is well positioned to build on its current momentum. What makes this recovery different is that it is being felt where it matters most: in household finances. Lower interest rates are now working alongside rising employment, moderating inflation and improving access to credit to strengthen affordability and restore confidence among both consumers and investors.
Unlike previous rebound periods driven by temporary boosts, today’s momentum is anchored in stronger fundamentals – supporting long-term financial stability and giving homeowners and buyers greater confidence that this recovery has staying power.