The 2025 Home Buyer's Guide: To Buy or Not to Buy

Feb 4

The real estate market has seen its ups and downs in recent years, but 2025 could be a pivotal year for prospective homebuyers. As we enter a new era, it's crucial to consider how global economic factors and investment strategies will impact the housing market. So, should you take the plunge and buy a house this year? Let's explore some key elements that will shape the decision-making process.

1. Interest Rates: The Biggest Influence on Mortgages

Interest rates are one of the most significant factors when buying a home. In 2025, expectations are that interest rates might remain slightly higher than the historically low rates we saw during the pandemic. The Federal Reserve and central banks have hinted at tightening monetary policies to curb inflation, which means that mortgage rates could be elevated, making borrowing more expensive. In 2025, South Africa’s prime lending rate stands at 11.25%, following multiple increases by the South African Reserve Bank (SARB) to control inflation. This has made mortgages more expensive compared to the historically low rates seen during the pandemic. For instance, a R1 million bond at 11.25% interest over 20 years would require monthly repayments of around R10,500.

For potential buyers, this could mean higher monthly repayments and the need for a larger deposit. However, if rates stabilise or drop, there could still be opportunities for those who can afford the initial down payment. The key here is to stay informed about central bank movements and how interest rates evolve in the months leading up to your purchase.

2. Inflation and Housing Prices: Will They Continue to Rise?

Inflation has been a concern for most of the global economy, and it’s expected to have a lasting impact on the housing market in 2025. Higher costs of materials, labour, and goods mean home prices have been increasing steadily. In 2018, building a house cost approximately R7,500 per square metre, whereas in 2025, this figure has risen to around R11,500 per square metre. This significant jump reflects the rising expenses in the housing market, making new builds more expensive than ever.

If you’re eyeing a specific market, it’s important to research price trends. Areas such as Gauteng and the Western Cape continue to experience high demand, leading to higher property prices. If you’re looking to buy for investment purposes, it may be worth exploring markets that are expected to grow as well as undervalued properties that could provide long-term returns.

3. Job Market Stability: Can You Afford It?

Another key consideration is the overall job market. If the global economy remains stable or sees growth in key sectors, more people will have the financial security to commit to homeownership. With unemployment at approximately 32.9%, financial stability can be a concern for many potential buyers. Industries such as tech, healthcare, and finance may continue to flourish in 2025, offering a steady income stream for potential buyers. However, if economic turbulence causes job instability, some buyers may find it harder to take on a long-term mortgage.

However, government support through the FLISP subsidy programme is available for first-time buyers earning between R3,501 and R22,000 per month. This can significantly lower the financial barriers to homeownership, especially for those in lower to middle-income brackets. Investigating these resources and assessing personal job security are essential steps before committing to a property purchase.

Buyers need to evaluate their own financial situation and job stability when deciding to make the leap into homeownership. It’s important to be aware of the broader economic outlook and how it impacts your personal financial situation.

4. Property as an Investment: The Long-Term Play

While owning a home is often seen as a financial commitment, it’s also one of the best long-term investments. In 2025, property is likely to remain a solid option for those looking for wealth growth. Real estate has traditionally held its value, and with inflation causing asset prices to rise, the value of homes could appreciate over time. Additionally, buying a home offers tax benefits and equity building that renting doesn’t.

However, it’s important to evaluate your long-term goals. If you’re looking to settle down and establish roots, buying a home in 2025 could be a good move. But if you’re unsure about staying in the same location or prefer more flexibility, renting may be the better option.

5. Rent or Buy: Is It Worth the Commitment?

While buying may be the right choice for many, there’s also the question of renting versus owning. Renting offers flexibility, especially in a world where career changes and mobility are common. It’s an option for those who don’t want to be tied down by the responsibilities of homeownership.

In 2025, the decision to buy or rent will depend on the individual’s financial health and long-term goals. If the mortgage market remains expensive and unstable, renting might be a more viable option for people looking to save or invest elsewhere.

Final Words: To Buy or Not to Buy?

The decision to buy a home in 2025 is deeply personal and should be approached with careful consideration. Economic factors such as interest rates, inflation, and job market stability will play a major role in your decision, as will the potential investment value of real estate. So, for those with secure jobs and financial resources, buying a home could possibly be a worthwhile investment and the way to go, in a rising market. However, for others, renting and saving for a deposit might be the smarter choice until the economic landscape improves.

As you weigh the pros and cons, it's important to think about your long-term financial situation, the stability of the housing market, and whether now is the right time for you to invest in your future.

Ultimately, 2025 may offer opportunities for savvy buyers, but it’s crucial to stay informed, plan carefully, and make a decision that aligns with your goals and circumstances.