The impact of financial strain on South Africa's property market: what consumers need to know

The fact that consumers are under quite a bit of pressure, having to borrow to meet basic needs, has a negative impact in the long term with regard to the property landscape. 

The Q2 2025 Debt Index, released on Wednesday by DebtBusters, reveals that despite inflationary pressure easing slightly, consumers continue to use loans to make ends meet – with 95% of people who applied for debt counselling during the quarter having a personal loan, and a further 54% having one-month (payday) loans.

Even though interest rates have come down, which is very welcome in terms of property financing, the income that consumers have available to invest or buy into properties is much less than what it was several years ago, says Benay Sager, the executive head of DebtBusters. 

He said, however, that the situation now was probably a little better than five years ago, but far worse than 10 years ago.

“And that has a negative impact. A lot of consumer income is taken up by really expensive loans, which happen to be personal loans, and at 23 – 25% per annum interest rates, that eats up a lot of the available disposable income.”  

The debt counselling agency said it generally sees that the mix of credit that consumers come to them with is different, normally related to income levels.

It said that, for example, for those taking home R20 000 or more, about 22% of their debt is home loans for properties, whereas for those earning less than R10 000, it’s only 6% of their debt. And for those earning much higher – more than R35 000 – it’s about 38% of their debt.

So, it flexes with income levels: the higher the income level, the more property-related credit features in one’s loan profile.” 

Sager advised aspirant homeowners and homeowners to watch interest rates very closely. He said they should find the right range of property for themselves and be ready: do everything you can to allow yourself to have about 30% of your take-home pay available to service a bond.

I would advise that you don’t go over that: your total debt repayments should not be more than 30% of your take-home pay.

Create that room in your take-home pay, especially if you’re an aspirant homeowner, so that when the time comes and the right property is available with the right interest rate, you can qualify for the loan.” 

DebtBusters said it expected consumers to be under pressure. “Yes, there has been some relief, particularly in terms of interest rate reductions and many people accessing the two-pot retirement system for some of their savings. Also, particularly for government employees, there’s been some consolidation loan granting.”  

However, on the other hand, Sager said South Africa’s inflation is mostly public sector driven, in the sense that it comes from regulated prices (electricity, rates and so on) – and since it has been in almost double digits for the last several years, it really puts the consumer under a lot of pressure.

“We  also certainly see that incomes haven’t grown as much as they used to, and we expect the picture to continue to be quite similar for the next two years or so for the South African consumer.” 

Last week, this publication reported that house prices are now rising faster than inflation.

The FNB House Price Index averaged 3.7% year-on-year in July, marking a notable shift. 

According to the FNB Residential Property Barometer, August 2025, for the first time in the post-pandemic era, equity values generated by sectional title properties marginally outpaced those of freestanding homes (3.8% vs. 3.7%).

The shift in buyer sentiment towards sectional title properties was said to likely reflect evolving lifestyle preferences and affordability constraints. 

The overwhelming majority of South African households are currently priced out of the local property market, and this trend is worsening, said Renier Kriek, the managing director of innovative home finance provider, Sentinel Homes, recently. 

Independent Media Property