South Africa’s latest Medium-Term Budget Policy Statement offered temporary fuel levy relief to ease household pressure, but property analysts warn that short-term financial measures alone will not address the deeper structural barriers preventing millions from achieving homeownership.
Budget Relief Falls Short of Housing Needs
Finance Minister Enoch Godongwana’s October 2026 budget announcement included temporary fuel levy relief aimed at reducing transport and living costs for consumers already facing rising expenses, higher borrowing costs, and constrained disposable incomes. While such measures provide some breathing room, the critical question for the property sector remains whether they can meaningfully improve housing affordability or stimulate meaningful demand.
According to Lightstone Property, lasting progress requires addressing structural obstacles across housing finance, employment, income growth, and the supply of appropriately priced homes. “Improving access to homeownership requires a broad approach that considers interest rates, employment and income levels, credit access and the availability of suitable housing stock,” said Esteani Marx, Head of Real Estate at Lightstone Property.
Mortgage Activity Rises, Affordability Remains Elusive
Lightstone’s bond-financing research tracking mortgage-backed property transactions from 2011 to 2025 shows a clear link between interest rates and housing market activity. Lower borrowing costs generally support mortgage demand, while higher rates reduce affordability and limit purchasing power. However, interest rates represent only part of the equation.
Bonded property transfers rose from approximately 110,000 in 2024 to 118,000 in 2025, marking around 7.3% growth. Despite this uptick, mortgage-financed transaction volumes have remained relatively flat over the longer term. Household income constraints, strict lending requirements, and the overall cost of purchasing property continue restricting broader market participation.
“Interest rates are an important factor in determining what buyers can afford, but the bigger question is whether households have the financial capacity and access to funding needed to enter the property market in the first place,” Marx noted. This distinction matters significantly for investors and developers, as increased mortgage volumes do not necessarily signal broad-based affordability improvements or signal a new wave of homeowners entering the market.
Younger South Africans are falling further behind in homeownership prospects. Lightstone data reveals that buyers under 35 accounted for roughly 31% of total bond value issued in 2025, down from around 40% at their peak in 2005. These figures indicate that younger households are increasingly struggling to enter the property market, even when financing options exist.
Multiple factors contribute to this challenge. Rising living expenses reduce income available for monthly bond repayments. Job insecurity and limited salary growth affect borrowing capacity. Additionally, deposits, transfer expenses, and legal fees create substantial upfront financial barriers. Suitable properties within affordable price ranges also remain scarce in many desirable locations.
“This suggests that affordability pressures are not simply delaying individual purchasing decisions. They are also influencing when South Africans can enter the property market and begin building wealth through home ownership,” Marx explained. Delayed entry into homeownership means younger households have less time to build property equity and accumulate wealth through ownership.
First-time buyer activity has contracted significantly across both affordable and middle-to-upper housing segments. In the affordable segment, first-time buyer transactions declined from approximately 32,000 in 2021 to 22,000 in 2025 — a contraction of about 31% over four years. Only 38% of first-time buyer transactions in this segment were bond-financed in 2025.
The middle-to-upper housing segment experienced a similar downturn, with first-time buyer transactions falling from roughly 77,000 in 2021 to 57,000 in 2025, representing a decline of approximately 26%. These figures highlight a market where aspiring homeowners struggle to convert housing demand into completed purchases.
Structural Barriers Beyond Budget Relief
The September 2026 repo rate increase to 7.25% continued to weigh on prospective homeowners, reinforcing how sensitive mortgage eligibility remains to interest rate fluctuations. Even modest shifts in borrowing costs can determine whether a household qualifies for finance or falls outside lending criteria.
These upfront payments often represent a larger share of total purchase costs for lower-income buyers, making homeownership less attainable despite temporary relief measures.
“Lower household expenses may improve monthly cash flow, but they do not automatically translate into mortgage eligibility,” Marx observed. A household benefiting from reduced fuel costs may still face disqualification due to high existing debt or insufficient documented income.
The gap between housing demand and completed purchases continues to widen, particularly among entry-level buyers. Developers report longer sales cycles and increased inquiries from financially constrained prospects, reflecting broader economic uncertainty.
Collaboration Needed Across Housing Value Chain
Lightstone emphasizes that addressing affordability requires coordinated action from lenders, developers, and government. No single intervention can resolve the complex interplay between income growth, credit access, and housing supply.
Institutional investors are showing renewed interest in affordable housing projects, provided risk-adjusted returns align with development goals. Partnerships between private developers and public agencies aim to accelerate the delivery of appropriately priced homes.
Infrastructure investment remains a bottleneck in many high-potential areas. Reliable services and transport connectivity influence both property values and long-term affordability, making location a decisive factor for buyers.
“Greater alignment between household income levels, housing supply, lending practices and infrastructure development is essential,” Marx stated. Progress depends on synchronized efforts rather than isolated policy changes.
