PROPERTY FINANCE IN SOUTH AFRICA: THE OPPORTUNITY BANKS ARE FUNDING
There is a belief I hear surprisingly often from aspiring property investors:
“The banks don’t want to lend me money.”
After my recent conversation with Nondumiso Ncapai, Managing Executive of Home Loans at Absa, I think it is time we challenge that belief.
Because the reality is almost the exact opposite.
Banks are in the business of lending money. They want to finance property. They want good customers. And when an investor has the right financial profile, understands affordability, manages credit responsibly and buys the right assets, South Africa offers an extraordinary financing environment in which to build wealth through property.
My conversation with Nondumiso reinforced something I have believed for many years: South African property investors have opportunities available to them that investors in many other parts of the world simply do not have.
South Africa’s property market is more alive than many people realise
There is plenty of negativity around South Africa, and if you consume enough headlines, you could easily convince yourself that nobody is buying property.
The data tells a different story.
Absa’s Homeowner Sentiment Index showed overall confidence in the South African property market reaching a record 88% in the first quarter of 2026. Buying, selling and investing sentiment all improved during the quarter. (propertyinsights.absa.co.za)
Home-loan activity is also recovering strongly. OOBA reported that by Q1 2026, home-loan application volumes had risen 15.9% from their Q4 2023 low, while the value of applications had increased by 30.4%. First-time buyers represented 48% of applications. (ooba.co.za)
That is not a dead property market.
It is a market with opportunity.
Nondumiso made a crucial point during our conversation: there is no single “South African property market”.
Cape Town is different from Johannesburg. Johannesburg is different from Gqeberha. One suburb can behave completely differently from another suburb only a few kilometres away.
We have seen enormous demand and constrained supply in parts of the Western Cape. Gauteng, on the other hand, has significant stock available, with properties often remaining on the market for longer.
For an investor, that can mean negotiating power.
I said during the interview that just because all the fish are swimming in one direction does not mean you should automatically swim in that direction too.
Property investing is not about following crowds.
It is about following numbers.
Property finance in South Africa: our greatest advantage is access to leverage
I recently travelled through Switzerland, Germany and Hungary, and I was struck again by how favourable South Africa can be when it comes to property finance.
In many markets internationally, buyers need significant deposits.
In South Africa, banks compete aggressively for good home-loan customers.
Absa currently advertises home-loan financing of up to 110% for qualifying borrowers, while broader market data shows continued strong demand for both 100% and cost-inclusive loans. (absa.co.za)
Think about what that means.
Property is one of the few asset classes where an ordinary person can potentially acquire a R1 million asset without first saving R1 million.
That is the power of leverage.
You contribute your capital, the bank contributes its capital, a tenant can contribute towards servicing the financing, and over time you participate in the ownership of the asset.
Used responsibly, this can become one of the most powerful wealth-building mechanisms available.
I know this personally.
If banks had never been willing to lend me money, I would not have the property portfolio I have today.
Banks do not simply ask, “How many properties do you own?”
One of my favourite parts of the conversation was discussing how investors manage to build portfolios of tens or even hundreds of properties.
Nondumiso explained that, from the bank’s perspective, the important question is not simply how many properties somebody owns.
The question is whether the customer can demonstrate affordability and whether the lending remains responsible.
That distinction matters enormously.
There is a misconception among investors that eventually a bank simply says, “You already own enough property.”
In reality, sophisticated investors focus on continuously improving the financial profile that banks evaluate.
That includes your income, expenses, credit behaviour, repayment history, existing debt, property values, rental income where applicable, and the quality of the transaction you are presenting.
Your credit profile therefore becomes an asset in itself.
Before you start scrolling through property portals looking for your next “deal”, understand your finances.
Know your budget.
Pull your credit report.
Know what the banks see when they look at you.
Then shop.
Refinancing: where property investing becomes really powerful
For me, the most exciting part of our interview was our discussion about equity.
Many people look at a successful property investor with a large portfolio and imagine that person must have started with enormous amounts of cash.
Frequently, that is simply not what happened.
Many investors build portfolios by recycling capital.
They buy well.
The property increases in value, or they create value through improvements.
The outstanding loan reduces.
Equity develops.
Then they approach the bank again.
Nondumiso explained equity simply: it is essentially the difference between what a property is worth and what you still owe on it.
If you own a property worth R1.3 million and your outstanding financing is R1 million, there is theoretically R300,000 of equity sitting inside that property.
That does not automatically mean the bank hands you R300,000. You still need to satisfy affordability and credit requirements.
But it creates options.
Absa describes a further advance as a mechanism through which qualifying customers can potentially increase their home loan to access some of the value created in their property. (absa.co.za)
Then there is the re-advance.
Imagine your original bond was R1 million and you have reduced the balance to R800,000. Subject to the bank’s assessment and the facility available, you may potentially be able to access some of that R200,000 again.
Another powerful tool is the money investors pay into an access-bond or Flexi Reserve-type facility over and above the required monthly instalment.
Instead of allowing surplus cash to sit unproductively, investors can reduce interest while potentially retaining access to some of that capital, subject to the bank’s rules and affordability requirements.
That capital can later help fund another opportunity.
This is how leverage begins to compound.
Buy. Create equity. Access capital responsibly. Buy again. Repeat.
Not recklessly.
Strategically.
Think ahead when registering your bond
We also discussed something I have practised for years: registering a bond for a higher amount than the initial loan where appropriate.
Suppose I buy a property for R1 million but believe, based on evidence rather than wishful thinking, that its value could be R1.3 million.
Where possible, I prefer having the bond registered for the higher amount from the beginning.
Why?
Because if I later want to increase the financing and the property supports that valuation, some of the registration work for the higher bond amount has already been done.
That can make future refinancing more efficient and can avoid certain additional bond-registration costs.
Small strategic decisions at purchase stage can have enormous consequences when repeated across a portfolio.
Leverage is powerful, but leverage can also destroy you
This was perhaps the most important warning in our conversation.
Debt magnifies outcomes.
When things go well, leverage can accelerate wealth creation.
When things go badly, leverage can accelerate losses.
I have seen investors with sizeable portfolios get into serious trouble because interest rates increased by only a few percentage points.
On one property, an extra R1,000 or R2,000 per month might be manageable.
Multiply that shortfall across 20, 30 or 50 properties and suddenly you have a crisis.
That is why a professional investor does not calculate whether a deal works only at the current interest rate.
Ask:
- What happens if rates increase?
- What happens if the property is vacant?
- What happens when maintenance arrives?
- Have I included levies, rates, insurance, management costs and repairs?
A property that works only when everything goes perfectly is not a robust investment.
Not every property will grow in value
This may have been the most important investing lesson Nondumiso shared.
She spoke openly about having purchased a property herself that did not experience the capital growth she expected.
That happens.
There is a dangerous idea in property that you can simply buy anything, anywhere, wait long enough and inevitably become wealthy.
You cannot.
Location matters.
Supply matters.
Demand matters.
Tenant profile matters.
Purchase price matters.
And most importantly, strategy matters.
If I am buying primarily for capital growth, I need evidence supporting future demand and scarcity.
If capital growth is limited, then the property had better produce strong cash flow.
Every property needs a job.
The opportunity belongs to educated investors
Perhaps my biggest takeaway from speaking with Nondumiso is that the home-loan industry itself is evolving rapidly.
Applications are becoming digital. Decisions are becoming quicker. Banks are using more data. Switching between banks is becoming increasingly normal. Green financing is developing. Rental-income propositions are evolving. Financing solutions are becoming more sophisticated.
Absa, for example, now promotes an online home-loan application process that can be initiated in around 15 minutes, including applications from individuals, joint applicants and legal entities. (absa.co.za)
That last point is also important.
Companies and trusts can obtain property finance.
The process may involve more documentation because the bank needs to understand the entity, its ownership and the people behind it, but the idea that you cannot finance property through a properly structured legal entity is simply incorrect.
For investors serious about building portfolios over decades, understanding financing, taxation, legal structures and risk management becomes increasingly important.
The investors who win will not necessarily be the people who predict the market perfectly.
They will be the people who are prepared.
They understand their numbers.
They protect their credit profiles.
They build relationships with banks.
They buy properties strategically.
They create equity.
They refinance responsibly.
They maintain financial reserves.
And above all, they understand that property investing is not a sprint.
Think in decades, not months.
Because property is ultimately about far more than buying buildings.
As Nondumiso reminded me during our conversation, for millions of South Africans property represents ownership, wealth creation and dignity.
And for the disciplined investor who understands how to use financing responsibly, it remains one of the most extraordinary vehicles available for building generational wealth.
Jaco Grobbelaar