Bad news for property in these areas

House price growth varies widely across South Africa. While some areas, like the Western Cape, have seen extremely high rates of property inflation, others, like the Northern Cape and Limpopo, have had a lacklustre performance. 

This is according to Stats SA, which recently published monthly residential property price indices for provinces and metropolitan areas since March 2023.

The Residential Property Price Index (RPPI) tracks the price changes for all types of homes, including houses, townhouses, and flats bought by private individuals. 

In the 12 months leading up to March 2024, the national RPPI rose by 3.5%, an increase from the revised 3.1% in February 2024. Residential property inflation has been on the rise since hitting a low of 1.6% in May 2023.

Stats SA said that in March 2024, property prices in the Western Cape saw the largest increase, rising by an average of 7.7% compared to March 2023. 

North West followed with a 5.0% rise, and Mpumalanga experienced a 2.3% increase. In contrast, property prices dropped by 4.8% in the Northern Cape and 2.3% in Limpopo, while Gauteng saw a slight increase of 0.7%.

The RPPI report also covers South Africa’s major cities. In metropolitan areas, the RPPI rose by 2.6% annually in March, up from 2.1% in February, with Buffalo City Metropolitan Municipality showing the highest increase at 7.0%. ​

“Residential properties in the City of Cape Town were 5.7% more expensive,” Stats SA said.

“In Gauteng, both Ekurhuleni and the City of Tshwane registered increases. However, prices in the City of Johannesburg cooled by 1.3%.”

“Nelson Mandela Bay Municipality in Eastern Cape and eThekwini Municipality in KwaZulu-Natal also registered declines.”

There was also a difference in the data recorded for new and existing properties.  

In metropolitan areas, the price index for new properties increased by 3.1% in March, which was higher than the 2.4% rise recorded for resold properties.

“The RPPI time series shows how prices have changed over a five-year period. Nationally, there was an increase of 23.8% since March 2019, an average annual increase of 4.8%,” Stats SA explained.

The Western Cape leads with a 35.5% increase in property prices over this period, while the Northern Cape saw the slowest growth at just 0.9%. 

In Gauteng, property prices only increased by 16.4%, which is below the national average.

Freehold properties in Nelson Mandela Bay Municipality saw a significant 31.1% increase over the five years. 

In the City of Tshwane, freehold properties rose by 30.3%, while sectional title properties in Buffalo City Metropolitan Municipality went up by 30%. 

“The City of Johannesburg has experienced a sluggish market, with overall growth rising by 8.6%,” Stats SA concluded.

Measured over a longer period, property inflation has risen dramatically in South Africa over the last 30 years. 

According to Lightstone data, the average nominal sale price surged from just under R150,000 in 1994 to R1.4 million in the first quarter of 2024. 

This represents an 833% increase over the period, significantly outpacing inflation, which grew by 451.9% over the same time.

Salaries have not kept pace with inflation, making it more difficult for South Africans to become homeowners. This is reflected by the increasing average age of first-time buyers, which is nearing 40.

Despite this, TransUnion data shows a 6.7% increase in new home loans in the first quarter of 2024 compared to the previous year, though the average loan value has decreased by 6.2%. 

This suggests a shift towards more affordable properties, driven by financial strain and first-time buyers entering the market. 

However, overall outstanding home loan balances have increased by 7.6%, and delinquencies have worsened by 140 basis points compared to the previous year.