FNB recently named Tshwane as the most popular area for couples and first-time buyers, as homeowners increasingly look to the area for their first homes.
The city also beats out Johannesburg when it comes to house price growth, with Tshwane’s estimated average year-on-year house price growth rate of 3.84% higher than Joburg’s 2.71%.
However these increases need to be consider with the rise cost of inflation, warns FNB property strategist, John Loos.
“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%,” said Loos.
“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%, compared to Joburg at -24.1% and Ekurhuleni at -25.7%.
FNB found that the cumulative performance of the Tshwane area doesn’t point to a strong pattern of low end vs high end out performance or vice versa.
“Over the past five years, cumulative house price growth within Tshwane is estimated to have been the strongest in the Winterveldt-Mabopane-Soshanguve-Ga-Rankuwa-Hammanskraal region, to the tune of 59.95%, and this is the lowest priced region,” Loos said.
“However, the same cautions apply here as they do to former ‘township’ regions in Johannesburg, i.e. care must be taken with interpretation due to the price distortions created by Government subsidised homes that are transferred to their new owners.
“In the fourth quarter of 2017, however, the higher end did look weak-ish, with the two most expensive regions, i.e. Pretoria East and Pretoria South East, recording lowly year-on-year house price growth of 1.81% and a negative -1.57% respectively,” he said.
Loos added that some of the more affordable “former suburban” regions fared a little better: Pretoria West with 7.99% year-on-year house price growth, Akasia with 7.02% year-on-year price growth, and Pretoria North with 5.7%. showing which areas have seen the greatest increase in prices over the last five years.