Markets & Investment
How female leaders are reshaping Cape Town's multi-billion property market
28 Aug 2025
Millennials drive South African housing market boom with record-high purchases
Millennials are emerging as the driving force behind South Africa’s resurgent housing market, fuelling record-high purchases and renewed buyer confidence.
Source: Supplied.
With home-loan applications climbing to their strongest levels since 2022, demand is surging particularly in the affordable and mid-market segments.
“This upward trend among younger and mid-career buyers reflects a growing demand for larger, more family-oriented homes," says Bradd Bendall, BetterBond’s national head of Sales.
There have been notable shifts in the average home-purchase price across age groups, adds Bendall. “BetterBond’s data shows that for the 12 months ending July 2025, two price barriers have been broken within different age groups.”
Millennials accounted for the strongest year-on-year price growth just above inflation. Their average spend on a home purchase moved decisively above the R1.4m mark, increasing by 3.9% to R1.54m. Meanwhile, homebuyers in their forties broke through the R1.6m mark for the first time, spending on average R1.75m on a home.
In contrast, buyers in the 51–60 age cohort were the only group to experience negative real house-price growth. These trends suggest a gradual move away from a buyers’ market, with younger buyers driving much of the homebuying activity and millennials' appetite for larger, family-oriented homes underscoring a generational shift which is reshaping property trends nationwide.
These demographic shifts are mirrored in overall lending activity, which climbed sharply in July, according to the latest BetterBond Property Brief (August 2025), with a 14% quarter-on-quarter increase and a 12% year-on-year increase, says Bendall.
“These surges signal a marked rebound in buyer confidence following recent interest-rate cuts. The BetterBond index of home-loan applications is now only 8% below its peak in 2022, when rising interest rates started to limit affordability."
Record-high house prices
Thanks to lower inflation and rising investor confidence, pent-up demand in the housing market is starting to ease, particularly in the affordable and mid-market segments, explains Bendall.
“We have seen the purchase price of homes for all buyers hit a record high in July, breaching the R1.6m mark for the first time.” For first-time buyers, the average purchase price has reached a new record high of R1.3m, outpacing inflation on both a quarterly and annual basis.
“While average house prices remain below the highs seen in 2022, the July interest-rate cut is likely to encourage more activity, and future cuts should shift homebuying activity towards a sellers’ market.”
Home-loan activity across price bands
In contrast, BetterBond’s data suggests a slowing in demand for homes of below R500,000, with more than half (54%) of all home loans granted in the past year being between R500,000 and R1.5m.
The most active segment is for bonds of between R500,000 and R1m. While the share of the lowest price bracket, below R500,000, dropped by 5.7%, the share of loans awarded to houses priced above R3m increased by 7%, says Bendall, reflecting renewed confidence among higher-income buyers.
“This suggests that affordability remains a challenge at the lower end of the market. Any further lowering of the prime lending rate will undoubtedly create opportunities for these buyers to enter the market.”
Similarly, further cuts in the lending rate should ease pressure on banks, helping to curb the recent rise in average deposit requirements. BetterBond’s August Property Brief shows that after declining by 17% year-on-year in the second quarter of this year, the average deposit required of first-time buyers increased by 5.8% to R188,000. For all buyers, the average deposit jumped 14% to R311,000.
“While these deposit requirements will be a concern for aspirant buyers, the figures remain below the record highs seen at the start of 2024.”
Investment in existing properties
Bendall says the impact of higher interest rates can still be seen in the noticeable rise in building plans approved for alterations and additions. Many homeowners who might have upgraded to larger or more upmarket homes are instead choosing to renovate and extend their existing properties. As a result, the share of building plans increased from 25.4% of total plans in 2016 to 31.5% by May this year.
The value of residential buildings completed from January to May 2025 reached R18.6bn, with notable differences across provinces. Although Limpopo was in pole position for year-on-year growth, this improvement from a low base is unlikely to ease supply constraints in this province, says Bendall.
“As expected, the Western Cape led the way for the value of completed flats and houses, with R4.4bn worth of completions representing a robust 20% year-on-year increase off a high base.”
Gauteng followed closely at R4.1bn, while KwaZulu-Natal recorded R1.6bn. The Eastern Cape and Mpumalanga lagged behind, contributing relatively little to the overall national total.
“These regional variations point to an imminent shortage of housing stock in sought-after areas, particularly in metropolitan hubs such as Cape Town, Johannesburg, and Durban. With applications and prices on the rise, limited new supply could reinforce upward price pressures.”
Combined, the upward trends in bond-application volumes and house-price growth point to a property market that is steadily gaining momentum, concludes Bendall. “Home-loan activity is at levels last seen post-pandemic, and house prices have surged to record highs.
"With the prime lending rate dropping to 10.5% with the July repo rate cut, we expect this positive home-loan activity to continue over the next few months.”