Is it a good time to buy your first home – or should you wait?

Parts of the housing market have been showing signs of recovery – banks were approving more home loans, first-time buyer activity was increasing and younger professionals were returning to the market, helped by 100 percent home loans and products that assist with upfront costs.

But this week's 0.25 percent interest rate increase will make it harder for aspiring buyers to afford repayments and there is uncertainty about future rate hikes. In addition, they must still navigate growing financial pressure from rising living costs.

Food, fuel and electricity costs remain high. Debt stress is climbing. Many households are already stretching their salaries to cover basic monthly expenses, making the real question not just whether you can buy a home but whether you can realistically afford to keep one. Despite this, bond originator ooba says many people yearn to enter the property market.

“People do not usually buy homes simply because market conditions are favourable,” says ooba CEO Rhys Dyer. “They buy because they are reaching important life stages, getting married, starting a family, relocating for work or looking for long-term stability.”

Buying a home is about more than timing the market

But Dyer warns that emotional readiness and financial readiness are not always the same thing.

“If your finances are not strong enough yet, waiting a little longer can place you in a much better position later. Homeownership should improve your financial wellbeing, not leave you financially exposed,” he adds.

Ooba’s market data shows that first-time buyers now make up almost half of all home loan applications and approval rates remain relatively strong.

Stephan Potgieter, the CEO of another bond originator BetterBond, says the resilience of the market before the recent rate hike has surprised many analysts.

 BetterBond had been seeing "stronger application volumes, rising household incomes and growing activity from first-time buyers despite ongoing economic pressure”, he said.

But he also warned that affordability for buyers could change quickly.

Inflation and interest rates still matter… a lot

South Africa’s inflation outlook remains uncertain. Global oil price shocks, geopolitical tensions in the Middle East and rising fuel costs continue to put pressure on household budgets. Economists also warn that food inflation risks remain elevated.

Even a small increase in interest rates like that announced this week make monthly bond repayments more expensive and put household budgets under even more pressure.

Old Mutual Wealth investment strategist Izak Odendaal says you cannot not assume interest rates will hold.

Many buyers underestimate how quickly changing economic conditions can affect their ability to afford a new home.

“A home loan is a long-term financial commitment. Buyers need to ask themselves whether they could still comfortably manage repayments if fuel, electricity and interest costs rise again,” Odendaal says.

The hidden costs many first-time buyers miss

One of the biggest mistakes first-time buyers make is focusing only on the property price. In reality, owning a home involves several additional costs that can quickly overwhelm unprepared buyers.

These include: Transfer attorney fees, bond registration costs, rates and taxes, levies for sectional title properties, insurance, maintenance and repairs, moving costs, utility deposits and municipal charges. Read more in: The hidden price tag on your dream home: What banks won’t tell you. 

Property finance experts generally recommend budgeting an additional eight to 10 percent of the property value for upfront costs. That means buying a R1 million home could require another R80 000 to R100 000 before you move in.

Some banks are also introducing cost-inclusive home loans that help cover transfer and registration costs. Standard Bank says demand from younger buyers is growing with the availability of these loans that reduce upfront costs, but it is important to understand the full cost of home ownership.

100% home loans still exist — with a catch

Banks are also increasingly offering 100 percent home loans to first-time buyers, particularly younger professionals with stable incomes and good credit records. Ooba’s data shows that more than 60 percent of first-time buyer applications recently were for zero-deposit loans.

“There is definitely greater willingness among banks to support buyers with limited upfront capital,” Dyer says. “But affordability assessments remain strict.”

A deposit, however, remains one of the strongest ways to improve affordability and reduce long-term financial pressure, BetterBond says.

“A deposit is not always required, but it puts buyers in a far stronger position,” Potgieter says. “It reduces the amount borrowed, improves the likelihood of better interest rates and provides a financial cushion from the start.”

He says many buyers try to qualify for the biggest possible bond instead of protecting future financial flexibility.

“The goal is not simply to buy a home,” he says. “The goal is to buy a home you can still comfortably afford if life becomes more expensive six months from now.”

Borrowing the full purchase price can be dangerous if you do not also have emergency savings. Without a financial buffer, even relatively small shocks, like car repairs, rising fuel prices or temporary income loss, can quickly create repayment pressure.

Why some homeowners lose their properties

The harsh reality is that many South Africans buy homes when they are already financially stretched. And according to credit bureau TransUnion, growing debt pressure and rising living costs means many are already vulnerable.

Consumers are already making difficult trade-offs just to manage their monthly obligations, and relying heavily on credit for daily expenses, Ayesha Hatea, director of research and consulting at TransUnion South Africa, says.

“When consumers are already financially stretched before taking on a home loan, even minor increases in living costs can create serious repayment stress,” she says.

The buyers most at risk are usually those who purchase at the absolute edge of affordability and when fuel prices rise, unexpected expenses happen or interest rates increase, there is no room left in the budget, Hatea says.

So… should you buy now or wait?

There is no universal answer. If you are financially stable with manageable debt, emergency savings and a realistic budget, there may be opportunities in the current market conditions.

But if you are already struggling with debt, an unstable income or rising monthly costs, waiting to improve your finances may be a smarter financial decision.

Rather than looking for the time in the market to buy, buy when you are financially resilient. Building financial resilience means:

Improving your credit score

Reducing expensive debt

Building emergency savings

Saving toward a deposit

Understanding the full cost of ownership

Stress-testing your budget against future rate increases

Read more in How can I make good plans to buy my first home?

What do I need to know when buying a home? and

What do I need to know about getting a home loan?

Successful homeownership depends not only on whether you can qualify for a bond today, but whether you can still comfortably afford your home months or years from now, when life becomes more expensive.

And while South Africa’s housing market may be opening the doors wider to first-time buyers, the smartest purchase decision is the one that protects your financial stability long after you get the keys.