10 suburbs where South Africa’s young middle class want to live – and what they’re paying

South Africa’s young middle class is buying fewer houses than it did six years ago, but they’re spending more, and Gauteng remains a hotspot due to affordability and economic opportunity.

According to Lightstone Property’s data, in 2018, 92,558 property purchases were made by individuals aged 26 to 35, but by 2023, this number had dropped to 69,577, the lowest in the six-year period—showing a 25% decline.

Total property transfers also trended downwards, falling from 294,859 in 2018 to 255,726 in 2023, a 13% decrease.

In 2018, 26 to 35-year-olds accounted for 31% of all property purchases, but by 2023, this figure had decreased to 27%.

Those under 25 also saw a proportional decline in purchases, dropping from 11,480 in 2018 to 8,977 in 2023, constituting 4% of total purchases.

The decrease in young and active homebuyers can be attributed to the increasing cost of living and high interest rates, making it difficult for many young professionals to afford to own homes.

This is evident in Lightstone’s data, as it reveals that homebuyers under the age of 35 are paying more for their homes.

In 2023, 36% of them paid between R1 million and R3 million, compared to only 29% in 2018.

Additionally, the proportion of homes priced between R250,000 and R500,000 dropped from 34% in 2018 to 25% in 2023.

Most popular suburbs

The majority of sales in 2023 and 2024 occurred in

• Impumelelo, a housing development project in Devon in the Sedibeng Municipality of Gauteng
• Sky City, a housing development project in Ekurhuleni, and
• Belhar, Cape Town.

The majority of property transactions by young middle-class South Africans occurred in Gauteng. This is partly due to the province being considered the economic hub and partly due to its affordability.

Seeff Property Group noted that areas within Gauteng—including Johannesburg—are the most affordable areas in the country whether you want to buy or rent.

“Greater Johannesburg continues to experience the highest influx of people migrating to urban centres in search of economic opportunities, and they continue to find good value,” the group said.

Affordability is a key characteristic of the Johannesburg property market. The data indicates that nearly 77% of this year’s transactions have been below the R1.5 million price mark, with almost half (47%) of these below R700,000.

Only 4.82% of transactions are valued at R3 million and above.

According to the data, the average price for first-time buyer homes is around R700,000 to R800,000, while the average price for luxury homes is R4 million.

Despite Gauteng’s value, the migration trend of those moving to the coast and what has been considered a better-run province is also evident as young first-time homeowners look to the Western Cape.

The popular suburbs within Cape Town and Somerset West include Belhar, Sandown, Atlantic Hills, and Sitari.

Optimistic news is on the horizon for property owners and potential buyers as sentiments towards interest rate cuts are taking a positive turn.

Despite the postponement of the interest rate cycle reversal to the end of the year, the fog of uncertainty surrounding the timing of the cuts is dissipating.

According to economists at Nedbank, the South African Reserve Bank (SARB) is likely to initiate rate cuts as soon as September 2024, with an anticipated 25 basis point reduction.

Following this, another 25 basis point cut is projected for November.

Read: Trouble for homeowners in South Africa – even in complexes and estates