Good news in the numbers

The World Bank has estimated that South Africa's economic growth rate will rise from 1,2% this year to 1,8% in 2026 and 3% by 2027, and even the extremely cautious Reserve Bank recently upped its growth predictions in line with this forecast.

This would be the best news for the 8m people currently unemployed in SA, since it is only at 3% GDP growth or above that job creation will start to exceed the number of job seekers. 

Meanwhile, there is a growing belief among economists and financial analysts that SA could regain its investment grade credit rating within three years and might even see an improvement in its sub-investment grade ratings by the end of this year. 

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The country lost its last investment grade rating in November 2019 and is currently rated at BB- with a positive outlook by Standard & Poor; Ba2 with a stable outlook by Moody's and BB- with a stable outlook by Fitch Ratings.

The prospect of this changing for the better is important because every notch up in the rankings makes it less costly for the country to borrow money in international markets, which means it can spend less on debt repayment and more on the development of the country. Higher ratings would also boost private investor confidence and prompt more foreign companies and wealthy individuals to buy into SA and enable our economy to grow even faster.

As things stand, though, local business confidence is currently at the highest level it has been since 2015 and consumer confidence has returned to pre-pandemic levels, as reflected in a retail spending surge at the end of 2024 and, we are happy to note, a significant increase in residential property demand.

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The latter is clearly evident in the latest BetterBond statistics, which show a 6,6% YOY increase in the number of home loan applications, and an 8,1% increase in the number of home loan approvals. 

We were particularly pleased with the reported increase in the percentage of first-time buyers at the end of last year, and with a 9,6% increase in the number of home loans approved for first-time buyers of the past 12 months, because this is a strong indicator of financial recovery in lower-income households, especially after the recent interest rate decreases.

It is also extremely important for the overall health of the real estate market because more than 50% of all home sales still fall into the under-R1,5m category, and this always takes the biggest hit when first-time buying drops off.  

Nevertheless, we are still advising all prospective buyers to exercise caution in planning for a home purchase and ensure that they allow enough margin to be able to afford their bond repayments even when living costs or interest rates rise.