In the second quarter of 2024, while house prices have risen in several provinces, only the Western Cape has experienced real growth in residential property values after adjusting for inflation.
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The Q2 2024 Oobarometer report from Ooba Home Loans reveals the latest property market trends in South Africa. The report indicates that national and first-time homebuyer purchase prices have both seen slight nominal increases of 2.3% and 2.7% year-on-year, respectively.
Despite these increases, real property price growth remains negative due to persistent high inflation. According to Rhys Dyer, CEO of Ooba Group, both the national and first-time homebuyer average purchase prices have declined compared to the previous quarter. The national average price now stands at R1 458 924, down 1.4%, while the average for first-time homebuyers is R1 150 238, a 1.8% drop.
‘This may reflect potential homebuyers making more cautious decisions ahead of elections and anticipated interest rate cuts,’ Dyer suggested.
Regions such as Limpopo, Free State, and the Eastern Cape have shown nominal year-on-year increases in average purchase prices, though Mpumalanga has shifted into negative territory. However, the Western Cape has led the way with notable growth in Q2 2024, showing the strongest increases in both first-time and repeat homebuyer categories, with nominal rises of 7.8% and 6.3%, respectively. It is the only region to show real, inflation-adjusted price increases.
Current inflation data stands at 5.1%. KwaZulu-Natal, in contrast, has experienced the largest declines in house prices for both first-time and repeat buyers, at -6.3% and -7.2%, respectively. Johannesburg and the West Rand have also seen declines of -2.6% year-on-year.
Experts attribute the Western Cape’s real price growth to improved service delivery and investment in the region. The Africa Wealth Report by Henley & Partners predicts that Cape Town will see its millionaire population nearly double over the next decade, while Johannesburg’s will decline.
Smaller towns in the Western Cape, particularly in the Cape Winelands, are also expected to see a rise in millionaires. The Winelands region has seen a 28% increase in millionaires over the past decade, with similar growth projected for the Garden Route and Whale Coast, which saw increases of 32% and 35%, respectively.
This trend is mirrored in the property market, with significant growth in Cape Town and other Western Cape towns. The migration of wealthy individuals from Johannesburg, driven by declining service quality, is a contributing factor. Millionaires prioritise personal safety, reliable services, and political stability when choosing where to live.
John Loos’ 2024 property insights for FNB highlight the critical role of municipal and utility service reliability in commercial property markets. Rising municipal rates and utility costs are affecting net property income, leading to continued relocations to areas with better services.
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