Housing Finance in South Africa

Overview

South Africa has a developed housing finance sector. As the mortgage market does not yet meet the breadth of the population who might afford a mortgage, most households still finance their housing independently, with savings or non-mortgage credit.

The lowest recorded interest rate on a mortgage in South Africa is 10.5 percent, as of September 2016, and requires at least a 20 percent down payment. There are currently an estimated 1.79 million mortgages in the country, with the average mortgage size being US$ 62 986. The cheapest newly built house by a developer recorded by CAHF is US$ 24 788, which is for a 40 square metre unit. Cement prices are considerably lower than the continental average, at US$ 4.06 for a 50-kilogram bag.

With an urbanisation rate of 2.43 percent, demand for affordable housing will remain strong, both for rental and purchase. Housing microfinance will play an important role in increasing the supply of housing, and efforts to increase access should be undertaken as the current average microloan size is only US$ 1 358. Despite having the highest mortgage to GDP ratio in Africa, many South African households struggle to access housing finance. This is partly due to a high rate of household indebtedness combined with an insufficient supply of suitably affordable houses. Yet there are opportunities to expand access, particularly by stimulating the RDP resale market, which units are fully government-subsidised, and by supporting small-scale landlords. With a good macroeconomic environment, sound policy, better data and increased access to affordable credit, an enabled housing market can increasingly provide housing that the average household in South Africa can afford.

Find out more information on the housing finance sector of South Africa, including key stakeholders, important policies and housing affordability:


Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2016 edition, which has up-to-date profiles for 51 African countries.

Download yearbook
View more
View more
View more
View more
Loading...