August 2025 marks the fourth consecutive month of real house price growth according to the latest FNB House Price Index which accelerated to 4.5% year-on-year, marking the fastest annual house price growth in over three years.

While the Western Cape continues to lead in house price growth, Gauteng and KwaZulu-Natal, which showed stagnant growth in early 2025, are now gaining momentum. Recent data highlights a turning point for these regions, with house price growth picking up from a relatively low base and narrowing the gap between the Western Cape and other provinces with broader regional contributions suggesting an expansive recovery.

Despite improving demand and rising prices, mortgage lending remains subdued. According to SARB data, outstanding mortgage balances grew only 2% year-on-year in July 2025, a rate that has remained in a narrow range for several months and reflecting a muted expansion in housing credit.

“A key question going forward is whether the credit cycle will begin to reinforce the housing market recovery. If interest rates remain stable or decline further, improved affordability could encourage more buyers to finance purchases, and banks may become more willing to extend home loans. A pickup in mortgage lending would provide an additional tailwind to sustain house price growth,” says Siphamandla Mkhwanazi, FNB economist.