South Africa’s housing market continues to gather momentum, with the latest FNB Property Barometer reflecting the strongest price growth in more than three years.
House Prices on the Rise
The FNB House Price Index (HPI) rose 4.5% year-on-year in August, edging higher from July’s 4.4%. This marks the fourth consecutive month of real house price growth, a notable achievement given the current high interest rate environment. The last time growth reached these levels was in 2022, when borrowing costs were significantly lower.
Regional Trends
The Western Cape remains the frontrunner, supported by strong demand and lifestyle-driven migration. However, other provinces are beginning to catch up. Both Gauteng and KwaZulu-Natal—which showed little movement earlier this year—are now experiencing renewed growth. This suggests the recovery is broadening geographically, with more regions contributing to the upswing.
Mortgage Lending Still Subdued
Despite the uptick in demand and pricing, mortgage lending remains cautious. Data from the South African Reserve Bank shows that outstanding mortgage balances grew by only 2% year-on-year in July. This indicates that banks are still hesitant to expand credit aggressively, and buyers remain careful about taking on new debt. For now, the recovery is demand-led rather than credit-fuelled.
What Lies Ahead?
Looking forward, the big question is whether credit growth will begin to reinforce the recovery. If interest rates stabilise—or begin to fall—housing affordability could improve, encouraging more buyers to enter the market. This would likely prompt banks to open up lending further, creating an additional boost for property prices.
In the meantime, a combination of cooling inflation, supportive monetary policy, and pent-up demand is expected to sustain the positive trajectory in the housing sector. While the market has shown impressive resilience, a more broad-based recovery will depend on a stronger rebound in credit growth