What the average house price in South Africa gets you in Joburg, Durban and Cape Town

·3 Feb 2024

Despite declining nominal property price growth, there are still several silver linings for South Africa’s property market.

According to ooba Home Loans, the average national property price in Q4 2023 started at R1,411,434 – down by 0.8% and 0.9% from Q4 2022 and Q3 2023, respectively.

The average approved bond size did, however, increase by 1.2% from Q3 2023 to R1,301,395 in Q4 2023.

The average deposit as a percentage of the purchase price dropped by 9.3% year-on-year, with it now at R110,039 or 7.8% of the average purchase price. First-time homebuyers, on the other hand, increased their deposit as a percentage of the purchase price by 6.4% on the last quarter and up 23.7% from Q4 ‘22.

“This shows that first-time homebuyers continue to prioritise deposits and understand the importance of savings – regardless of the climate. This statistic cannot be underestimated as it sets the tone for a potential surge in first-time homebuyers once interest rate cuts commence,” Rhys Dyer, CEO of ooba Group, said.

Other positives for the market include the increase in buy-to-let properties and the willingness of banks to offer competitive home loan deals.

Dyer noted that the average interest rate offered by banks is now at -0.48% below prime (4 basis points lower than in Q3 2023), which sends a good signal to the market:

“It indicates confidence by the banks and an ongoing appetite to compete for home loan market share. Here, the banks are looking to attract new-to-bank customers with additional rate concessions, and we expect this strategy to prevail throughout 2024.”

Although some of the key indicators did decline in Q4 2024, this was to be expected.

“The statistics are representative of the end of a tough two years, largely defined by interest rate hikes, increased inflation, and the rising cost of living. They paint a realistic picture of the effects of a high interest rate environment on the average homebuyer,”

“However, what is good to see is that, despite national property prices coming under pressure as a symptom of the lower demand for property, South Africans’ nominal salaries are growing at a faster rate than property prices, boosting would-be homebuyers’ ability to enter the property market.”

The slight drop in bank approval rate from 84.4% in Q4 2022 to 81.6% in Q4 2023 highlights the financial stress and affordability challenges that the average homebuyer is under amid current high interest rates.

“However, what is encouraging to see is that bank approval rates have only dropped by just under 2% from the 83.5% that ooba Home Loans was securing for our homebuyers at the start of the rate hike cycle in Q4 2021,” says Dyer.

With banks still giving loans, BusinessTech has looked at what the average price of a property in South Africa can buy in the nation’s three biggest cities – Johannesburg, Cape Town and Durban:

3 Bedroom House For Sale in Westdene, Johannesburg
Price: R1,399,999