FNB has released its Gauteng house price indices for the fourth quarter of 2017, showing which areas have seen the greatest increase in prices over the last five years.
According to FNB property strategist, John Loos, all three of Gauteng’s major metros continue to show low single-digit house price growth.
In the fourth quarter of 2017, the City of Ekurhuleni’s estimated average house price growth rate was 3.92% year-on-year, slightly stronger than Tshwane’s 3.84% and City of Joburg’s 2.71%.
“With Gauteng Consumer Price Index (CPI) Inflation at 4.7% year-on-year for the 4th quarter of 2017, these low nominal house price growth rates translate into house price declines in real terms (when adjusted for CPI), Tshwane to the tune of -0.8% year-on-year, Ekurhuleni -0.8% and Joburg -1.9%,” he said.
“The three Gauteng Metros thus continued their broad decade-long correction which started around 2008.”
Loos said that since the first quarter of 2008, Tshwane’s cumulative real house price decline has been -22.5%, Joburg -24.1% and Ekurhuleni -25.7%.
House price growth
FNB found that none of the City of Joburg’s sub-regions have had an extremely strong house price growth performance in the past five years – especially when considering that some of Cape Town’s sub-regions inflated by over 100% during this period.
Since the end of 2012, the lowest income region, i.e. the former “township” region of Diepkloof/Soweto/Meadowlands/Pimville has shown the strongest cumulative growth of 52.42%, with the Midrand/Diepsloot region second-strongest with 26.17% cumulative growth.
Meanwhile the highest value region, Sandton and surrounds, has grown the slowest growth off the highest base (16.16%).
“More recently, the Diepkloof/Soweto/Meadowlands/Pimville region remains the highest estimated house price growth region at 13.88% year-on-year in the fourth quarter of 2017,” said Loos.
“Caution must be exercised when it comes to Repeat Sales House Price Indices using deeds data for low income regions, however, because social housing is often initially registered at values not related to market value, artificially inflating a repeat sales house price index more than the market reality,” he said.
“The second strongest house price growth was experienced in the second-most affordable sub-region in the fourth quarter of 2017, namely Lenasia/Orange Farm/Ennerdale/Lawley, to the tune of 4.5%.”
“The highest priced “Sandton and surrounds” sub-region was the weakest in terms of price growth, turning negative to the tune of -0.97%,” he said.