First quarter data from FNB shows that Gauteng Metro and Major Council House Price Indices continued to mostly show low single-digit rates of growth well-below general consumer price inflation, meaning further price decline in real terms.
“However, our first quarter FNB Estate Agent Survey showed a noticeable uptick in the Gauteng Metros’ Activity Ratings, which leads us to anticipate mildly stronger house price growth in this region in 2018,” said property strategist John Loos.
Using Deeds Office Data, FNB said that all three of Gauteng’s major metros of City of Joburg, Tshwane, and Ekurhuleni continued to show low single-digit house price growth.
In the 1st quarter of 2017, the City of Tshwane had by a small margin the strongest estimated average house price growth rate to the tune of 3.34% year-on-year, followed by City of Joburg’s 3.01% and Ekurhuleni with 2.92%.
With Gauteng Consumer Price Index (CPI) Inflation at 4.1% year-on-year for the 1st quarter of 2018, these low nominal house price growth rates translate into house price declines in real terms (when adjusted for CPI), Tshwane to the tune of -0.7% year-on-year, Joburg -1.0% and Ekurhuleni -1.1%.
Since the first quarter of 2008, Tshwane’s cumulative real house price decline has been -23.12%, Joburg -24.19% and Ekurhuleni -26.49%, FNB said.
Although slow growth appears almost everywhere in the City of Joburg outside of the regions to the south-west, the broader region to the north and north-west of the Johanneburg CBD (Central Business District) appears to have been the weakest price growth part of the Metro, said Loos.
“This region is also generally speaking where the highest income households live, and is on average the highest priced part of the Metro.”
Sandton and Surrounds had the slowest house price growth, negative to the tune of -0.4% year-on-year and having been on a slowing trend.
The Midrand-Diepsloot Region (dominated by Midrand area trends) was slightly less weak at 1.09% growth and slowing, and the Town of Johannesburg (which includes the CBD but also certain of the high income suburbs just to the north of the CBD) on 1.36% and still slowing.
Only the Town of Randburg had begun to show slight growth acceleration, from 2.6% in the previous quarter to 2.79%.
The marginally more affordable major regions of Roodepoort (west) and Johannesburg South showed only slightly better house price growth than the more northern regions, the former showing year-on-year growth of 2.85% and Johannesburg South 3.58%.
To the South West of Johannesburg lie the lowest priced regions, i.e. the “Diepkloof-Soweto-Meadowlands-Pimville” and the “Lenasia-Orange Farm-Ennerdale-Lawley” regions.
These regions have shown accelerating growth in their indices of late, and have the 2 strongest year-on-year growth rates as at the 1st quarter of 2018, the former region showing 12.37% year-on-year growth and the latter region 5.11%.
In the 1st quarter of 2018, only the City of Joburg House Price Index had shown a very slight acceleration in its year-on-year growth rate on the previous quarters, from 2.92% in the 3rd quarter of 2017 to 3.01%, while the other two metro regions – Tshwane and Ekurhuleni – still showed slowing growth in recent quarters.
The Tshwane house price index has been the “outperformer” of the three metros by a small margin in recent quarters.
“However, we do expect a near term acceleration in house price growth in all three of these regions. The decade-long real price decline has gradually been improving home affordability in Gauteng, and first time buyer levels are solid as a result,” said Loos.
And in the first quarter, on the back of improved sentiment, agents surveyed in the FNB Estate Agent Survey reported significant increases in residential activity levels in their areas, increases to levels above the national average.
“This is usually a signal of a stronger and better balanced market on its way, both in Tshwane and the Greater Johannesburg region including City of Joburg and Ekurhuleni,” said Loos.