Gauteng property rebound  – beating Western Cape

Gauteng has reclaimed its top spot as South Africa’s dominant residential building region, despite the rising trend of semigration to the Western Cape.

This was revealed in the latest Pam Golding Properties Residential Property Index, which revealed that prices are rising faster for lower-priced houses and coastal properties.

Pam Golding CEO Andrew Golding said Gauteng’s rebound comes despite the influx of “semigrants” to the Western Cape and the growing demand for Western Cape properties among property investors.

Gauteng regained its top spot as the largest market for planned residential building activity as developers continue to identify demand for homes in Gauteng.

One of the key trends in recent years has been the outperformance of the Western Cape property market. The number of residential building plans passed in the region surpassed those in Gauteng for the first time in 2022. 

The Western Cape registered a further small increase in its share of plans that passed last year.

However, Gauteng recorded a surprise rebound in planned residential building activity and regained its traditional spot as South Africa’s dominant region in this regard, albeit by a slender margin.

Golding said the three largest provinces – 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,” he said. 

“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.”

Semigration slowed during 2023 after reaching a record high of 14% of all sales during the second half of 2022 – the highest percentage on record. 

However, it has rebounded once more in Q1 2024 – up from 10.9% in Q4 2023. Semigration averaged 13.2% in 2022 and 11.8% in 2023. 

According to Lightstone, the total value of South Africa’s residential property stock currently totals almost R6.88 trillion, said Pam Golding Properties research Sandra Gordon. 

“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,” she explained. 

“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 to R1.18 million for the average sectional title home and R2.7 million for an estate home.”

Gordon said that in 2010, properties valued at less than R500,000 accounted for 58% of all sales in South Africa. 

By 2023, this had declined to less than a third—at 31%—no doubt due to lower income earners under financial pressure and rising building costs over the past decade. 

In contrast, sales in the R500,000 to R1 million price band have remained steady in the period since 2010 at around 25% to 26% of total sales.

“The R1 million to R3 million 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 – R3 million to R5 million – and R5 million and upwards, have increased too,” Gordon added.