While the country’s economy trudges along and investors divest capital in search of better returns abroad, certain residential markets are holding up.
Buyers believe that Cape Town is the standout city in South Africa and that homes there are a secure and long-term investment. Not every investor is sending their money abroad into stocks, banks and real estate.
Pam Golding Properties, one of the largest estate agencies in South Africa. released its Residential Property Index and accompanying report this week, in which it said that the Western Cape province featured prominently, with house price inflation of +5.9% in July and 6.32% for the year to date.
While growth in house prices in the other major regions continued to lose momentum, in KwaZulu-Natal house price inflation was stabilising at +5.3% for July and for the year-to-date. Finally, in Gauteng, house price inflation slowed to +3.1% for July and 3.6% for year-to-date.
“While South Africa’s average national house price inflation rate of 4.41% for 2022 to date is the strongest growth experienced since 2016, excluding the post-Covid bounce in 2021, the index continues to lose momentum, slowing to a rate of +3.8% from year earlier levels in July,” said Pam Golding Properties CEO Dr Andrew Golding.
But Nelson Mandela Bay was the top performing coastal metro market with growth in prices continuing to accelerate, reaching +9.2% in April 2022, a level last recorded in late-2007.
Selling in order to upgrade was the highest in the Western Cape at 21%, followed by 14% in KwaZulu-Natal and 11% in both Gauteng and the Eastern Cape, according to FNB’s Estate Agent Survey for Q2 2022.
The Western Cape is widely regarded to have benefitted most from the surge in demand for larger, lifestyle properties triggered by the pandemic and lockdowns.
The Western Cape has also experienced a rise to number one in the country in terms of the total value of residential building plans passed and completed. In terms of the total number of residential building plans completed, Pam Golding Properties Research found that during the first half of 2022, the Western Cape accounted for almost half the national total at 47.9%, trumping Gauteng’s 29.5% and KZN’s 9.9%.
Coastal house prices, within 5km of coastline in South Africa continued to accelerate, rising to +8.3% in April 2022, while non-coastal property prices rose by +4.7% during the same month.
According to bond originator ooba’s statistics, property buyers continue to demonstrate confidence in the investment opportunities available in the property market, with the recovery in demand for investment or buy-to-let properties continuing, increasing to 7.9% of total loans in July 2022. This is a level last seen in late-2009 when the prevailing prime interest rate was 10.5%, down from a high of 15.5% in late 2008.
“Also positively, despite the recent interest rate hikes, and according to ooba, the percentage of mortgages extended to first-time buyers rose 49.9% in July, which is just under the 50% level seen prior to the temporary post-pandemic boom in first-time buyer activity,” said Dr Golding.