Good news for Gauteng homeowners

Pam Golding Properties Residential Property Index shows that national house price inflation (HPI) is rising in South Africa, with Gauteng leading the growth. Lower-priced houses and coastal properties are the best performers.

After stabilising at 3.01% in Q4 2023, national HPI in South Africa has inched higher in Q1 2024, rising to 3.1% in March 2024.

Pam Golding CEO Andrew Golding said this is largely due to anticipated lower interest rates later this year and stronger economic growth, which is likely to boost market activity and house price growth in late 2024.

“Notably, with Western Cape HPI 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,” he said.

“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 HPI in the lower price band, below R1 million, 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.

Positively, Golding said the surge in demand for investment or buy-to-rent properties continued in March 2024, lifting the Q1 2024 average to 12.5% of applications, compared to just 8.3% in Q1 2023. 

Notably, the Western Cape leads applications for buy-to-rent investment properties.

The banks remain supportive of this trend, with improved pricing, higher loan-to-value ratios and still elevated approval rates, with the national concession relative to prime easing to negative 0.55% in March 2024. 

The Q1 2024 average of -0.52% compares favourably to -0.45% a year ago and highlights the banks’ positive stance.

With household finances impacted by elevated interest rates, rising fuel prices and a sluggish economy, the demand from first-time buyers has dampened.

However, Gauteng South and East and the Free State are the exceptions, with the continued relative affordability of homes ensuring ongoing demand from this market sector.

According to Ooba Home Loans, the overall price paid by first-time home buyers rose to R1.17 million in Q1 2024, 4.8% higher than Q4 2023 and 3.1% above year-earlier levels. 

Ooba’s records reveal that the overall price paid by home buyers averaged R1.48 million in Q1 2024, also reflecting an increase of 3.1% from year-earlier levels.

Notwithstanding this, Golding points out that, rather than reflecting a recovery in demand in the market, the Q1 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.