First-time home buyers: Bond approvals, costs, and interest rates in SA
Following the recent interest rate hike on 23 September, many prospective first-time buyers might be feeling anxious about entering the property market. However, higher interest rates do not necessarily mean putting homeownership plans on hold.
Know what you can afford
“With life getting more expensive, it’s important to have a clear understanding of what you can realistically afford. This extends beyond just the monthly bond repayments. You also need to factor in costs such as transfer duty, conveyancing fees, rates and taxes, and bond registration costs,” explains Adrian Goslett, CEO and Regional Director of REMAX Southern Africa.
“Additionally, if you’re considering buying into a sectional title scheme, you will also need to account for monthly levies. Beyond these expenses, make sure there is enough room in your budget for ongoing maintenance and unexpected repairs that come with homeownership.”
Samuel Seeff, chairman of the Seeff Property Group adds that while the recent interest rate hike was certainly not what the property market had hoped for, the underlying fundamentals of the real estate sector remain stable and resilient.
Importantly, Seeff says the higher inflation and borrowing costs are temporary market conditions, attributed to the conflict in the Middle East. While the prime rate is now higher at 10.75%, it is still lower compared to what it was at the start of 2025.
"Given that real estate is fundamentally a long-term commitment, buyers and sellers should therefore not unnecessarily delay or hold off on their property decisions, he says. Despite these broader economic headwinds, the market remains active with transaction volumes remaining steady compared to last year’s levels," he says.
Adding that there will always be a need for people to buy and sell homes regardless of shifting economic or property cycles. While property buyers and sellers will need to adjust to the higher borrowing costs and market impact, he says good opportunities remain actively available for those ready to capitalise on them.
REMAX Southern Africa shares some practical tips to help first-time buyers navigate the property market with greater confidence and ease.
Get pre-qualified for a home loan: If you plan to finance your purchase with a home loan, instead of buying the property outright, it is advisable to get pre-qualified before you start house hunting. This goes hand-in-hand with understanding what you can afford, as pre-qualification provides an indication of the bond amount you may qualify for.
“Getting pre-qualified for a home loan can help you narrow your property search to homes within a realistic price range and avoid falling in love with a property that stretches your budget too far,” says Goslett.
Prioritise needs over wants: "We get it. You might dream of having a large garden, swimming pool or extra entertainment space, but these features can also push up the purchase price and ongoing costs of owning the home.
“When buying your first property, focus first on the things that will have the biggest impact on your everyday life, such as location, commuting distance, number of bedrooms, security and enough space for your needs. Once those essentials are covered, you can consider which additional features your budget allows," says Goslett.
Have the long-term plan in mind: While this might be your first home, you shouldn’t view it as a temporary decision. Buying and selling property comes with various costs, so purchasing a home that you are likely to outgrow almost immediately could become an expensive decision.
Think about how your needs could change over the next few years. You might need an extra bedroom, work-from-home space or easier access to schools and other amenities. While nobody can predict exactly what the future holds, choosing a property that offers some flexibility could help you stay in the home for longer.
Work with an experienced professional: “Buying your first home involves a number of unfamiliar steps and working with an experienced real estate professional can make the journey a lot easier. Don’t be afraid to ask questions,” Goslett adds.
Seeff says well-priced properties continue to attract demand. We see for example that in many areas properties are selling faster compared to prior years due to lower stock levels. For property buyers, navigating the current climate requires a practical reassessment of household affordability.
Buyers
"Buyers will now need to bear in mind that the interest rate hike has increased monthly bond repayment costs. On loans between R1 million and R3 million, this equates to an additional R168 to R506 per month depending on the interest rate and term of the loan.
"Buyers will therefore need to ensure their gross monthly income can comfortably cover these updated thresholds while leaving a sensible financial buffer to absorb potential future rate shifts," he says.
Seeff says if tighter lending criteria or stricter budgets stretch your dream home out of reach, remain adaptable by considering a slightly smaller property or exploring suburbs that offer better value. Putting down a bigger cash deposit can also reduce the monthly repayments and create a financial buffer, says Seeff.
"Importantly, obtaining a formal pre-qualification through a bond originator means buyers can ensure they know exactly how much they qualify for before starting their house hunting process. This way they can find the property that appeals to them and put in a confident offer so as not to lose out," he says .
For property sellers
Seeff says achieving success in today's market relies on realistic positioning and strategic presentation. Higher interest rates tend to shrink the overall pool of active buyers and tighten individual budgets. While overall demand remains persistent, buyers are more likely to examine price tags far more critically, making it essential to align asking prices with current market trends from the start.
"Sellers should also be prepared to approach negotiations with flexibility, as cautious buyers may be inclined to present lower offers. Working closely with an experienced property professional will help you accurately gauge local market sentiment rather than holding out for an unrealistic price, especially if you need to, or want to sell right now.
"Lastly, ensure the property is well presented. Aside from the obvious maintenance and repairs, it should represent value for the price you are asking. Highlight value-adding features such as solar power, boreholes, or low-maintenance gardens to offset utility pressures," he suggests.
Original Article: https://www.property24.com/articles/first-time-home-buyers-bond-approvals-costs-and-interest-rates-in-sa/33210