Prices for these properties in South Africa are rising much faster than the rest

 ·20 Mar 2023

Recent data from property analytics group Lightstone shows that property inflation in certain provinces has outpaced others.

According to its latest residential property indices, the current annual property inflation rate is at 2.51%, and monthly is equivalent to 0.12%.

Lightstone said that annual property inflation remained steady in the Free State, KwaZulu-Natal and Mpumalanga.

Limpopo and the North West saw an increase in property inflation, whereas in the Eastern Cape, Gauteng, the Northern Cape and the Western Cape saw a decrease.

Across various valuation segments, Lightstone reported that Low-Value residential property, yet again, exhibits the highest annual inflation at 10.2%.

By comparison, the mid-value residential property is only sitting at 3.4%, still the second highest segment.

High-value property owners are experiencing residential property inflation at 2.7%, on par with the national average, while the luxury sector is experiencing residential property inflation at 1.7%.

Lightstone bases its segments on the following property values:

  • Luxury: More than R1.5 million
  • High Value: Between R700,0000 to R1.5 million
  • Mid Value: Between R250,000 to R700,000
  • Low Value: Less than R250,000

Since 2017, the Low-value segment has experienced higher inflationary ranges, peaking at 11.4% in 2021.

To gather inflationary figures, Lightstone applies the repeat sales methodology when reviewing and reporting on property data. Lightstone’s repeat sales indices offer a means of measuring the genuine price inflation of homes that have been sold twice within a specific timeframe.

The graphs below show residential inflation metrics across the various value segments:

Looking at different provinces, Limpopo has the highest residential property inflation at 8.6%, according to the latest data (October 2022). Mpumalanga came in second at 6.4%.

The illustration below shows the various inflationary rates across the provinces:

Addressing the country’s major metros, reflecting their provincial position at 8.0% Nelson Mandela Bay had the highest residential price inflation. The City of Johannesburg also had the lowest at 1.2%:

  • Nelson Mandela Bay: 8.0%
  • Ekurhuleni: 3.9%
  • City of Cape Town: 3.3%
  • Ethekwini: 3.4%
  • City Tshwane: 2.9%
  • City of Johannesburg: 1.2%

Property buyers

The founder of Meridian Realty, Antonie Goosen, said that South African residential buyers are remaining prudent so far this year.

With eight consecutive interest rate hikes – and another expected at the end of this month – prospective homebuyers may choose to rent instead.

Goosen said rental demand is currently high as only buyers in the upper segment market can buy a property in light of the economic situation.

Increasing interest rates have affected first-time buyers and those looking to buy in the lower to middle price range. As a result, they are now reconsidering their decision to invest in real estate, Goosen said.

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