In a clear sign of recovery within the South African housing market, the annual national residential property price inflation reached 3.3% in September 2024, up from 3.0% in August 2024, according to the latest figures released by Stats SA.

The monthly increase of 0.4% also indicates a gradual upward trend in residential property values, with various factors converging to create a more dynamic market.

Prominent regions driving this growth include the Western Cape, boasting an inflation rate of 5.5% and contributing significantly with 2.0 percentage points to the national rate.

Gauteng followed, albeit at a more modest 1.2%, contributing 0.5 percentage points. In terms of metropolitan areas, the City of Cape Town stood out, with an impressive 5.4% rise, contributing 1.8 percentage points to a 3.1% annual increase in the metropolitan residential property price index (RPPI).

However, despite these positive trends, challenges lurk on the horizon, particularly for prospective homeowners in the affordable housing segment.

Mfundo Mabaso, product head at FNB Home Structured Lending, highlights the growing disconnect between house price appreciation and wage growth, which poses significant barriers for potential buyers, especially those earning less than R32,000 monthly.

Mabaso noted that "households earning less than R22,000 can benefit from First Home Finance,” a government housing grant that can assist in bridging the affordability gap. Furthermore, FNB has introduced the Collective Buying solution, allowing groups of up to 12 applicants to pool resources for a common goal: homeownership.

Senior Economist at FNB, Siphamandla Mkhwanazi, painted a more optimistic picture, attributing the slow but steady recovery in housing to improved wage growth, lower inflation, and declining borrowing costs. He pointed to positive sentiment in the market, supported by rising home-buying activity and shorter selling times, citing the findings of the FNB Estate Agents Survey from the previous quarter.

Mkhwanazi remarked, "With inflation now closer to the lower end of the 3%-6% target band, homeowners are beginning to see real growth in their residential asset values, a trend which is exciting as it’s not confined to major provinces."

Provinces such as Limpopo and Free State have shown remarkable house price growth, with increases of 7.6% and 5.8%, respectively.

Looking ahead to 2025 and beyond, Mkhwanazi expects continued growth in house prices, spurred by improving consumer fundamentals.

However, this positivity is tempered by caution as rising prices could deter new entrants to the market, particularly if affordable housing supply remains constrained.

Dr Roelof Botha, an economist associated with Optimum Investment Group and Currencies Direct, further illustrated the complex landscape.

He noted that while average home prices saw slight rebounds, they are still recovering from the adverse effects of consecutive interest rate hikes since 2022, which had depressed house values by 3.3% to 5% across age groups.

Moreover, Botha raised concerns about the rising deposits now required to access mortgage bonds, emphasising a staggering 29% increase in the average deposit for first-time buyers compared to January the previous year. Such barriers exacerbate the challenges already facing prospective homeowners.

As South Africa navigates both the promise of a recovering market and the realities of financial constraints, it remains clear that while the housing sector is witnessing growth, significant hurdles still lie ahead for those hoping to cross the threshold into homeownership.