While some of South Africa’s top 10 non-metros have experienced sluggish property price performances in recent times, others such as Middelburg in Mpumalanga, have grown robustly.
Data from analytics firm Lightstone shows that smaller towns are benefitting as they attract new property owners who can work remotely, while most cities are grappling with failing businesses and rising unemployment.
Hayley Ivins-Downes, head of digital at Lightstone Property, said all the non-metros share certain characteristics to a greater or lesser extent – growing populations, dominated by lower-income levels, with a pressing need for formal housing to replace informal settlements, improved service delivery and of course investment and job creation.
Lightstone’s ‘towns characterisation’ draws on various levels of location intelligence developed over time to provide a general view of towns in South Africa.
The data examines the overall health of the 10 largest non-metro towns by a number of households, including:
- Pietermaritzburg (KZN);
- Emalahleni (Mpumalanga);
- Klerksdorp (North West Province);
- Mmabatho (North West Province);
- Botshabelo (Free State);
- Potchefstroom (North West Province);
- Rustenburg (North West Province);
- Polokwane (Limpopo);
- Mdantsane (Eastern Cape);
- Middelburg (Mpumalanga).
These towns present an opportunity for people to enter and move up the property ladder if the economic circumstances permit it, the group said. Most people (89% nationally) live in low-income areas where household income is below R22,000 a month.
The graph below shows this proportion for the 10 towns and the average household incomes of those on either side of the line.
Polokwane has the ‘least poor’ (70% earn below the threshold) while Mdantsane and Botshabelo are categorised as only having lower-income areas.
The poor are “poorest” in Botshabelo and “least poor” in Rustenburg, while the wealthy are “wealthiest” in Rustenburg and “poorest” in Klerksdorp.
By comparison, average household incomes in the major cities are between 10% and 30% higher in Johannesburg, Pretoria, Cape Town and Sandton, while Durban is much closer to the average incomes recorded in the higher non-metro towns.
Data concerning household growth shows that the towns range in size from 50,000 to 150,000, and they have all grown in the period from 2011 to 2019.
Data from Statista demonstrates the upward urbanisation trend in South Africa over the last few years. This trend will continue as South Africans move to metropolitan areas in search of better work and lifestyle opportunities.
The increase in households in most urban centres will continue for the foreseeable future, Lightstone said.
“Of our top 10, Potchefstroom, Middelburg, Klerksdorp and Emalahleni are growing strongly in percentage terms. The townships of Botshabelo and Mdantsane grew slowly in the 2000s but have recorded ‘high’ (>9.5%) and ‘mid’ (<3.5%) level growth respectively over the past decade.”
Buying a home
Freehold property values are highest in towns with high household incomes such as Rustenburg and Polokwane.
Middelburg has the highest average value for sectional title living units. Average freehold prices in Rustenburg are around R1.1 million and around R1 million in Polokwane, compared to approximately R1.8 million in Johannesburg and Cape Town, and more than R3.5 million in Sandton.
“On closer examination, changes in property prices over the past five years have showcased dramatic differences,” said Ivins-Downes.
“Property prices in Botshabelo have bottomed out while there has been modest growth in Mdantsane, Polokwane, Rustenburg and Emalahleni.”
The data shows that freehold property prices have soared by 84% in Middelburg as the town has become a large industrial and agricultural centre, with a state hospital, clinic, a private hospital and several state schools.
The municipality expects the town’s population to reach 500,000 by 2030.
“Lightstone’s data shows that rising numbers are indicative of the challenges and opportunities facing most urban centres in South Africa,” said Ivins-Downes.
“The Klerksdorp market has dropped significantly in the last two years after being active and so still records property price growth of 42% (freehold) and 35% (sectional title) over the past five years.
“Other strong performers include Mmabatho and Potchefstroom. The lower numbers for most towns suggest tougher economic conditions taking a toll on the market, and the post-Covid-19 stimulus from government should determine, to an extent, on how these and other towns respond in the next five years.”