May 9 2024 17:45

Rebound in Gauteng house prices
After stabilising at +3.01% in the furth quarter of 2023, national house price inflation in South Africa has inched higher in the first quarter of 2024, rising to +3.1% in March 2024, with interest rates expected to fall later this year and stronger economic growth set to boost both market activity and house price growth in late-2024, according to the latest Pam Golding Properties Residential Property Index.
Dr Andrew Golding, chief executive of the Pam Golding Property group said: “Notably, with Western Cape house price inflation slowing markedly, at +2.9% in March 2024, growth in Gauteng prices continues to strengthen, currently at +2.5%, indicating that house price inflation in the two regions is rapidly converging. Also of interest, according to a recent data revision by Lightstone, house price growth is resurgent in the Northern Cape, rising to +4.2% in December 2023.
“Meanwhile, national house price inflation (HPI) in the lower price band, below R1m, continued to accelerate in March 2024, rising to +7.9%. Furthermore, the rebound in coastal house prices continued in December 2023, rising to +6.7%, while non-coastal HPI slowed, resulting in the coastal vs non-coastal price premium widening further, to +5%, a level last seen in mid-2005,” he said.
Surge in demand for investment properties
The surge in demand for investment or buy-to-rent properties continued in March 2024, lifting the first quarter 2024 average to 12.5% of applications, compared with just 8.3% in quarter one 2023. Notably, applications for buy-to-rent or investment properties are being led by the Western Cape.
Dr Golding said: “The banks remain supportive, with improved pricing, higher loan-to-value ratios (averaging at 91.4% in quarter one 2024) and still elevated approval rates, with the national concession relative to prime easing to -0.55% in March 2024. The quarter one 2024 average of -0.52% compares favourably with -0.45% a year ago and highlights the banks’ positive stance,” he said.
According to ooba Home Loans, the overall price paid by first-time home buyers rose to R1.17m in quarter one 2024, +4.8% higher than quarter four 2023 and +3.1% above year-earlier levels. Ooba’s records reveal that the overall price paid by home buyers averaged R1.48m in quarter one 2024, also reflecting an increase of +3.1% from year-earlier levels.
Rather than reflecting a recovery in demand in the market, the first quarter 2024 increase in the average price paid is largely attributable to more affluent buyers purchasing properties in high-demand areas, such as the Western Cape.
Gauteng reclaims top spot as SA’s dominant residential building region
Despite the influx of semigrants to the Western Cape and the growing demand for Western Cape properties among property investors, Gauteng has regained its top spot as the largest market for planned residential building activity, as developers continue to identify demand for homes in Gauteng.
Gauteng, the Western Cape and KwaZulu-Natal account for almost 80% of all residential property sales in the country.
“There have been two waves of semigration predominantly from Gauteng to the Western Cape between 2016 and 2018 and then again after the pandemic, which is visible in the shift in the share of property sales during these periods. Nonetheless, Gauteng maintained its majority share, accounting for nearly 40% of all sales in 2023 unchanged from 2010. In contrast, the Western Cape has seen an increase in its share while KwaZulu-Natal has seen a small decline,” Dr Golding said.
According to Lightstone, the total value of SA’s residential property stock currently totals almost R6.88 trillion, says Sandra Gordon, research analyst for Pam Golding Properties.
“Properties in estates are generally more expensive and, as a result, estate homes account for 6.6% of all homes but 18.1% of the total value. In contrast, freehold homes are by far the largest residential property sector, accounting for 80.5% of all homes but just 66.3% of all value, in part attributable to the fact that new, affordable homes are typically freehold. This is also illustrated by the fact that the average value of a freehold home is R807 463 compared with R1.18m for the average sectional title home and R2.7m for an estate home.
South Africa housing stock (February 2024)
Volume | Value | Ave value | |||
Number | % total | Total (trillion) | % total | (Rm) | |
Estate | 462 967 | 6.6 | 1.249 | 18.1 | 2.70 |
Freehold | 5 644 953 | 80.5 | 4.558 | 66.3 | 0.81 |
Sectional title | 905 691 | 12.9 | 1.071 | 15.6 | 1.18 |
TOTAL | 7 013 611 | 6.878 | 0.98 |
Source: Lightstone
In 2010, properties valued at less than R500 000 accounted for 58% of all sales in South Africa, according to Lightstone. By 2023, this had declined to less than a third at 31%. Sales in the R500 000 to R1m price band have remained steady in the period since 2010 at around 25% of total sales.
“The R1m to R3m price band accounted for 35% of all market sales in 2023, a significant increase from just 15% in 2010, while sales in the top two bands, i.e.: R3m to R5m and R5m and upwards, have increased too,” said Gordon.
alistair@propertyflash.co.za