The average house price vs household income in South Africa’s provinces

Financial services company, FNB says that all five of its major regions’ house price indices showed slowing year-on-year growth in the 3rd quarter of 2016.

It said that while the Western Cape region index remains by far the strongest performer, it may be “past its best” in the 3rd quarter.

Gauteng, the largest region, has been leading the way to slower average house price growth for a some years now, noted John Loos, household and property sector strategist at FNB.

Its year-on-year rate of increase reached a lowly 2.1% in the 3rd quarter, down from the 2.7% rate for the previous quarter, having slowed all the way from a 9.3% high at the end of 2012.

Gauteng is not the weakest in terms of house price growth, though, FNB said, with Mpumalanga, Free State, Northern Cape, North West and Limpopo Provinces rising by a mere 0.8% year-on-year in the 3rd quarter, while the Eastern Cape Province had a growth rate of just 0.1%.

Slightly stronger than Gauteng was KZN, with a house price growth rate of 4.2% year-on-year, albeit also on a slowing trend, FNB said.

The strongest performing province remains the Western Cape, with year-on-year house price inflation of 10.5%. Due to a combination of lifestyle, being well run, and with very good economic opportunities, the Western Cape is the most expensive province, with an average house price of R1,256,372, followed by Gauteng, and KwaZulu Natal.

Major rovinces’ house price average:

  • Western Cape – R1 256 372
  • Gauteng – R1 016 804
  • KwaZulu Natal – R988,142
  • Eastern Cape – R815,914
  • Other 5 provinces – R803,692

FNB pointed out that despite the Western Cape and Gauteng have by some margin the highest per capita and per household incomes.

The Western Cape had the highest Per Household Income of the major regions, to the tune of R245,788 p.a. in 2015, as estimated by IHSGlobalinsight. Gauteng is not far behind with R229,192 p.a., with KZN 3rd at R173,103 p.a.

On a Per Capita Income basis, Gauteng had the highest, estimated at R72,951 in 2015, followed closely by Western Cape with R70,628, and KZN.

Major 4 provinces’ income comparisons:

Province Per Household Income Per Capita Income
Gauteng R229 192 R72 951 
Western Cape R245 788 R70 628
KZN R173 103 R42 702
Eastern Cape R133 139 R33 791
Other 5 provinces R142 848 R39 793

Loos noted that Gauteng is the most affordable of the major regions in 2015, with an estimated average house price/per household income ratio of 4.44. The Western Cape has a ratio of 5.11, while the least affordable of the major provinces is the Eastern Cape, with a atio of 6.13 in 2015.

Despite the Western Cape being one of the more affordable housing regions, due to its high per household income, its affordability has deteriorated more noticeably than the rest in recent years, from a ratio of 4.37 in 2011 to 5.11 in 2015.

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The average house price vs household income in South Africa’s provinces