South Africa’s 2025 Property Market: Will the upswing last?

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• Pent-Up Demand fuels property market upswing: Interest rate cuts and increased consumer confidence have triggered a 16.2% rise in home loan applications, driving market recovery.
• Rising House Prices driven by high demand and low supply: Escalating construction costs and limited supply push South Africa's average house price above R1.6 million, outpacing wage growth.
• Uncertainty clouds long-term market outlook: Geopolitical risks and potential legal changes, like the Expropriation Act, could either strengthen or abruptly reverse the property market upswing.

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South Africa’s 2025 Property market upswing: What to Expect

South Africa’s residential property market is showing signs of recovery after a tough year, driven by several key factors. But the big question remains: Will this upswing last? Renier Kriek, Managing Director at Sentinel Homes, offers insights into what’s fuelling the rebound and whether it’s sustainable.

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Step 1: Pent-Up Demand drives market rebound

‍After the challenges of 2024, which saw a slowdown in property transactions due to pre-election uncertainty, South Africa’s property market is seeing a surge in activity.

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According to Kriek, "The desire for property transactions never goes away, but during tough economic times, people hold off." As economic conditions begin to stabilise, this pent-up demand is being released. A prime example of this is a 16.2% year-on-year increase in home loan applications in December 2024, as reported by bond originator Ooba.

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Interest rate cuts and the formation of South Africa's Government of National Unity (GNU) have further boosted consumer confidence. A Lightstone survey of estate agents revealed that 86% expect to reach their sales targets in 2025, up from just 73% in 2024.

"The combination of lower interest rates and a more stable political environment has rejuvenated the market," says Kriek.

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Step 2: House Prices continue to rise

South Africa’s residential property prices are continuing to rise, with the average house price surpassing R1.6 million for the first time. Kriek attributes this price increase to several factors, including rising construction costs and limited housing supply.

"It's more expensive to build new homes than to trade in existing ones," he explains. As a result, demand for older stock drives price increases, making it harder for first-time buyers to enter the market.

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While this is great news for property owners, it also creates affordability challenges for many South Africans. With property prices growing faster than wages, new trends are emerging in the market. Kriek predicts that developers will focus on smaller properties and include more amenities like padel courts, childcare centres, and restaurants to make micro-apartments more desirable.

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Step 3: Uncertainty over the market’s long-term future

Despite the current upswing, there are reasons to be cautious about the market's long-term outlook. According to Kriek, geopolitical and local risks, such as potential changes in property laws, could undermine the current boom.

"The Expropriation Act, although seemingly minor from a legal perspective, could have a symbolic impact that discourages future investments in South African property," he warns.

Kriek notes that the market’s future is highly uncertain. "It’s either going to get much better or suddenly worse from here," he states. If the economy strengthens, the property upswing could continue, but if lending becomes more restricted or legal uncertainties arise, the market could stall.

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Optimism amid uncertainty

While the South African property market is currently on an upswing, driven by pent-up demand, lower interest rates, and rising house prices, its future remains uncertain.

Renier Kriek remains cautiously optimistic, saying, "I'm eternally optimistic about South Africa," but acknowledges the risks that could impact long-term growth. Investors and buyers should keep a close eye on both economic indicators and political developments as 2025 progresses.

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