How long it takes to sell your home in South Africa’s 5 major metros

The latest FNB House Price Indices for the country’s major regions, reveals slowing price growth in the country’s recent star performing region, the Western Cape.

While the 4th quarter 2016 year-on-year average house price growth of 8% for the Western Cape remains a strong one, and is still far above the other major regions, it has slowed for three consecutive quarters from a 10-year high of 10.6% reached in the 1st quarter of 2016.

“It is likely that, after a recent period of very strong house price growth in the Western Cape, a mounting affordability challenge in the region, especially for aspirant 1st time buyers, has started to put some brakes on demand growth,” said household and property sector strategist at FNB Home Loans, John Loos.

FNB pointed out that since the beginning of 2010 (the start of the post-2008/9 recession recovery), the average house price for the Western Cape has risen cumulatively by 76.6%.

By comparison, the next strongest growth was in KZN, with a far more moderate 45.3% and Gauteng with 41.3% over the same period.

The property analyst noted that the Western Cape has benefited from a period of strong confidence in the region’s long term economic prospects, and has attracted a very strong net inward migration of repeat home buyers from other provinces on recent years.

“However, ultimately affordability has to play a role, and perhaps this is becoming evident when we examine our FNB Estate Agent Survey results to observe a low level of 1st time buying in the region,” Loos said.

Using the average for the final two quarterly surveys of 2016, estate agents in the City of Cape Town estimate 1st time buyers to make up a mere 10% of total home buyers.

By comparison, all other major metro regions have higher percentages, with Tshwane and Greater Joburg Metro Regions registering a far higher 22% and 28% respectively, FNB said.

The Western Cape is the most expensive major region by far, with an average estimated house price of R1.411 million, the next most expensive region being Gauteng with an average price of R1.042 million.

At the other end of the average house price growth scale, the Eastern Cape is the weakest with year-on-year decline of -2.9% as at the 4th quarter of 2016, while KZN and Gauteng registered low positive growth of 1% and 1.2% respectively.

The FNB House Price Index for the five smaller provinces, too, showed only 1.2% year-on-year growth in the 4th quarter of 2016.

Loos said that it is possible that a very weak period for the Manufacturing Sector in recent years – key drivers of the Ethekwini and Nelson Mandela Bay economies – may have impacted more significantly on these regions than in the case of the stronger services-driven economies of Gauteng and especially the Western Cape.

FNB also plotted a chart showing the average time homes are on the market for across the country’s five major metros:

Read: The coastal property markets in South Africa you should be investing in

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How long it takes to sell your home in South Africa’s 5 major metros