Are SA Homeowners Really ‘Bond-Locked’? New Data Says No
Just Property explains how accumulated home equity and bank competition are helping inland families unlock their dream coastal moves despite the interest rate increase.
With national house price growth ranging from 3.4% to 3.7% according to recent FNB Property Barometer data, and the Western Cape outpacing inland property pricing, a growing number of homeowners who believe they’re “bond-locked” are postponing their move to the coast.
But, says Paul Stevens, CEO of Just Property, while some households really are under financial pressure, many others can relocate once they understand their equity, the costs involved, and their options.
“When people talk about being ‘bond-locked’, they’re describing the feeling of being stuck. We’re seeing this among inland homeowners who want to move to the coast but believe that their current equity won’t cover coastal prices. With entry-level pricing in inland suburbs from around R1.2 million, and comparable coastal homes upwards of R1,8 million, this difference is reinforcing their belief that a move is out of reach,” he explains.
The SARB’s (South African Reserve Bank) decision in May to hike the repo rate by 25 basis points to 7.00% (thereby moving the prime lending rate up to 10.50%) has added to their affordability concerns, he continues.
“However, according to FNB, 67% of estate agents are expecting market activity to increase. Further, data from BetterBond shows that the banks are aggressively competing for market share, with some offering below-prime rates to strong buyers.”
People are still moving, he says. “What has changed is the level of planning that’s needed because you can’t wing it in this market.”
Seller misconceptions
For Stevens, the most common seller misconceptions include underestimating their equity, overestimating the cash they need to move, assuming that the coastal markets are completely out of their reach, delaying getting themselves pre-qualified, and thinking that they have to sell before they can explore their options.”
Before thinking the worst, he recommends doing a cost breakdown along the lines of this one for a R1,5 million sale (but updating the costs according to the selling price and thresholds):
Cost component | Price range/threshold | Impact on moving budget |
SARS Transfer Duty | R0 up to R1.21 million (scaled thereafter) | Significant out-of-pocket savings for mid-market buyers (SARS Transfer Duty thresholds per 2025/2026 tax brackets https://www.betterbond.co.za/calculators/bond-and-transfer/ |
Attorney Transfer Fees | R30 000 - R60 000 | Mandatory legal service charge based on property value |
Bond Registration | R20 000 - R45 000 | Required by banks to secure the new loan |
Compliance Certificates | R10 000 - R15 000 | Electrical, gas, beetle, and water legal clearances |
Physical Moving Costs | R8 000 - R20 000 | Highly variable based on distance and furniture volume |
Average Bank Discount | 0.65% below Prime Rate | Lowers the monthly long-term repayment burden |
More good news
The picture becomes even rosier for many of the homeowners who bought between 2016 and 2020. That’s because they’re often sitting on significant equity, even if they don’t realise it, Stevens explains. “Industry records show that the average purchase price for first-time buyers has risen to just under R1.2 million, while the national average has climbed to R1.6 million. A property bought for R1.2 million in 2018, for example, may now be worth closer to R1.6 million, depending on the area and its condition, of course.”
“People tend to underestimate how much equity they’ve built over time,” he says. “When we show them the actual numbers, the conversation moves from ‘I can’t move’ to ‘I didn’t realise I had these options’.”
Families need to focus on what they can unlock rather than what they can’t afford, according to Stevens’ advice in the current market.
“First, get your property professionally valued. Once you know what your equity is, you’ll be able to make a decision based on fact, not fear. And according to BetterBond, younger buyers are increasingly prioritising green, energy-resilient, and safety features. If your home has any or all of these value-adds and it’s priced correctly, chances are that it will sell quickly.”
Buyers could also consider shopping in suburbs that may not be their first choice, but which offer a similar lifestyle and better brick-and-mortar value. “Proximity to schools and workplaces is becoming just as important as square meterage, with more and more people buying homes that support their lifestyles and budgets, not just what they own.”
It may also be worth reconsidering sectional title properties as an alternative to freehold homes.
“Sectional title units are generally the most affordable entry point in coastal areas, with lower maintenance and running costs,” says Stevens. “Feeling bond-locked and being bond-locked are not the same thing. Once homeowners have the facts in front of them, many realise they’re far less stuck than they thought.”
