Ryon Phernambucq | 18 April 2025
Ryon Phernambucq is an associate financial planner at Fiscal. He has a BCom in Investment Management and Banking and has completed his Postgraduate Diploma in Financial Planning Law.
South African homeowners have experienced a rollercoaster ride with interest rates over the past few years. While the significant rate hikes of 2022-2023 created considerable financial pressure, the current landscape offers some respite with the repo rate currently at 7.5 percent.
These interest rate fluctuations have directly impacted families' abilities to maintain their homes comfortably, with each rate movement affecting monthly budgets significantly.
Most homeowners typically don't qualify for loans at the prime interest rate, but for illustrative purposes, the table below shows how bond repayments have changed since early 2023 compared to today:
 HOME LOAN REPAYMENTS HAVE EVOLVED |
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| Bond amount | March 2023 Monthly repayment at prime rate of 11.25%* |
Current Monthly repayment at prime rate of 11.00%* |
Difference |
| R700 000 | R7 344 | R7 239 | -R105 |
| R1 200 000 | R12 591 | R12 410 | -R181 |
| R2 400 000 | R25 182 | R24 820 | -R362 |
| R3 500 000 | R36 723 | R36 196 | -R527 |
*Calculated on a 20-year bond term |
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While homeowners are experiencing some relief compared to the peak rates of 2023, financial experts continue to advise caution. Economic uncertainties both globally and domestically mean that rate movements remain possible. Those considering transitioning from renting to home ownership should still build a buffer into their financial planning, ensuring their repayments aren't stretched to the absolute maximum of their budget.
The purchase price and bond repayments represent only part of the financial commitment of home ownership.
Initial purchase costs remain significant, including attorneys' fees for bond registration, transfer of ownership costs and deposits for utilities. These upfront expenses can add 8-10 percent to the purchase price.
Maintenance and insurance continue to be substantial ongoing expenses, typically averaging around 1.5-2 percent of the property’s value annually. This percentage tends to increase for properties older than 20 years, as these buildings require more frequent repairs.
Monthly municipal rates and taxes have seen above-inflation increases in many municipalities across South Africa. These cover essential services, such as sewerage, road maintenance, street lighting and refuse collection. Many homeowners have experienced significant increases in these costs in recent years.
Sectional title levies for those in complexes or estates have also risen considerably, often outpacing inflation. These levies fund day-to-day maintenance, security and management of shared spaces and facilities.
Utility costs, particularly electricity, continue their upward trajectory with regular tariff increases. Many homeowners are investing in alternative energy solutions, such as solar, to mitigate these rising costs. However, this requires significant initial capital outlay and periodic replacement of batteries, which adds to maintenance costs.
Garden and pool maintenance remains a luxury expense that requires ongoing expenditure. Water restrictions and rising water costs in many areas have made this aspect of home ownership increasingly expensive. Read more: What do I need to know when buying a home?
Let's take a real-life example: a two-bedroom apartment in Table View, Blouberg currently on the market for R1 829 000. This 70m² apartment comes with two bathrooms and a parking bay and is advertised as both Airbnb-friendly and pet-friendly (with approval).
THE COMPREHENSIVE COSTS OF HOME OWNERSHIP |
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| Bond details | Once-off costs | Monthly costs | |
| Bond amount | Bond registration & legal fees | Maintenance costs | Monthly instalments (at prime rate) |
| R1 829 000 | Part of R93 081* | R2 286** | R18 878 |
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*The property listing indicates total once-off costs of R93 081 (with transfer duty excluded as per the "NO TRANSFER DUTY" benefit) **Monthly maintenance provision calculated at approximately 1.5 percent of property value annually, divided by 12 |
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When contemplating property ownership in today's economic climate, it's essential to account for all associated costs beyond just the bond repayment. Equally important is building financial flexibility to accommodate potential future interest rate changes.
While we have seen some stabilisation in rates recently, global economic uncertainties mean homeowners should maintain conservative financial planning. The true affordability of a property must be assessed against both current costs and potential future scenarios to ensure sustainable home ownership in the long term.
It's worth noting that some properties, like our Table View example, may come with special benefits such as transfer costs included or no transfer duty. While these incentives reduce upfront costs significantly, prospective buyers should still carefully calculate the total monthly commitment, which includes not just the bond payment but also levies, rates, taxes, and ongoing maintenance. Additionally, investment-oriented features like Airbnb-friendliness may provide income opportunities to offset these costs, but require their own considerations around management, occupancy rates and additional wear and tear.
