Housing Finance in South Africa

Overview

South Africa’s government has been working hard in leading the effort to contain the spread of the Covid-19 virus.  CAHF is grateful to the hardworking essential sector workers, for their tireless efforts to increase the breadth of testing across our communities, to ensure that residents have access to essential services, and that our country and its residents are safe.  For up to date information on their efforts, visit the Online Resources & News Portal.

This profile is also available in French here.

To download a pdf version of the full 2022 South Africa country profile, click here.

South Africa is urbanising swiftly, as is the continent. In the last decade, the urban population has expanded at a 2% yearly rate, and by 2030, 71% of South Africa’s population will live in cities. Despite supplying roughly 3 million state-sponsored homes to low-income households since 1994, the government hasn’t kept up with the metropolitan population’s housing needs. In 2018, 26% of urbanites lived in slums. While rural income poverty is higher (81%) than urban (41%), urban poverty is often worse.

South Africa’s GDP is R6.8 trillion (US$418 billion), and its population is 60 million. After declining 6.4% in 2020, the economy expanded 4.9% in 2021 due to the progressive reopening of the economy following COVID-19 laws and movement limitations, increased global demand for South African exports, and high commodity prices. First-quarter 2022 GDP grew by 1.9%. Global recession fears pulled down commodity prices, and load shedding contributed to a 0.7% dip in second-quarter GDP growth. Residential and commercial construction declined 2.4% in the second quarter of 2022. Since April 2022, the rand has fallen due to recession, worldwide inflation, and interest rate hikes. SARB hiked repo rates to combat inflation. The latest repo rate hike in July 2022 to 5.5% adds to household pressure from rising food and gas prices. It’s 9.5%.

Extreme weather and climate change threaten South Africa. Flooding and landslides in Kwa-Zulu Natal harmed 40 000 people in April 2022.By 2025, natural disasters are expected to cost the government and economy 37%.

Recently built two-bedroom homes begin at R679 000 (US$41 374).Your monthly payments would be R6 000 (US$366) with 9% interest and no deposit.With a FLISP subsidy, an R20,000 (US$1,219) household could afford this. Even with a FLISP subsidy, these home prices are out of reach for those earning less than R18 000.

South Africa’s financial system includes mutual, cooperative, and foreign banks. Standard Bank, First National Bank, ABSA, Nedbank, and Capitec dominate the industry. Residential mortgages totaled R1.12 trillion (US$68.2 billion) at the end of March 2022, with 1.6 million borrowers representing 4.1% of the 15- to 64-year-old population.

Despite rising interest rates, South Africa’s housing industry is experiencing more mortgage lending and homebuying. Home improvement and expansion projects deserve microlending and investment. Lower-income consumers may prefer green mortgages with lower interest rates and electricity expenditures. Off-site modular homes are another option.

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 2022 edition, which has up-to-date profiles for 55 African countries.

 

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