The one province in South Africa where homeowners are taking a big hit in 2024

 ·1 Aug 2024

While house prices declined in several provinces in the second quarter of 2024, Kwa-Zulu Natal is the only one to see a double-digit drop in the price of residential property when adjusted for inflation.

This is according to the Q2 2024 Oobarometer report published by Ooba Home Loans, which highlighted the latest trends experienced by South Africa’s property market in 2024.

The latest report indicates that both national and first-time homebuyer purchase prices have experienced a modest nominal price increase year-on-year, with growth rates of 2.3% and 2.7% respectively.

However, when adjusted for inflation, real property price growth remains negative.

Rhys Dyer, CEO of Ooba Group, observed that compared to the previous quarter, both national and first-time homebuyers’ average purchase prices have actually decreased.

The national average purchase price has fallen by 1.4% to R1,458,924, while the average purchase price for first-time homebuyers is down by 1.8% to R1,150,238.

Dyer suggested that this decline could be attributed to potential homebuyers making more cautious decisions before upcoming elections and anticipated interest rate adjustments.

The latest data observed that the average purchase prices in Limpopo, Free State, and the Eastern Cape have increased compared to the previous year.

However, Mpumalanga, which was previously a strong contender, has experienced a decline.

Notably, the Western Cape showed the most substantial growth in the second quarter of 2024 for both first-time and repeat homebuyers.

After adjusting for inflation, property prices in these categories increased by 7.8% and 6.3%, respectively. These regions are the only ones where property prices have increased in real terms.

On the other end of the spectrum, like in Mpumalanga, prices dropped in Tshwane and North West, and Johannesburg and the West Rand.

KwaZulu Natal (KZN) saw the largest decline in both first-time and repeat homebuyer house prices, recording -6.3% and -7.2%, respectively.

However, the latest CPI inflation data shows the current inflation rate is 5.1%.

This means that real property prices in KZN have been hit by double-digit declines, recording -11.4% and -12.3%, respectively, when adjusted for inflation.

Johannesburg and the West Rand are the next closest, recording a decline of -2.6%– which translates to an inflation-adjusted -7.7% compared to last year.

Many experts point to service delivery and investment as the main factors affecting real price growth in the property market.

The wealth report revealed that millionaires prioritise personal safety, basic service delivery, and political stability when deciding where to live.

This is a major reason why the Western Cape has seen notable growth.

Similarly, property strategist John Loos’ analysis for FNB’s 2024 property insights emphasizes the importance of municipal and utility service reliability for commercial property.

The report points out that rising municipal rates and utility tariffs are impacting net property income.

As of 1 July 2024, eThekwini offers the second most expensive rates among the major metros, increasing well above inflation for the 2024/25 financial year.

Along with power cuts, which are experienced country-wide, KZN has also been barraged with water supply issues, including failing road and water infrastructure.

Kwazulu Natal Province has been struggling with service delivery for years, as several of its municipalities have been perceived to be dysfunctional.

Residents of Kwazulu Natal have complained about a lack of water, housing, electricity, and a filthy province which is no longer attractive to tourists as its beaches have continued to be closed and re-opened periodically as a result.

Although improvements in electricity supply are predicted, Loos expects people to continue relocating to areas with better services, leading to population shifts for residential and business activities—which includes KZN.


Read: Two new property investment hotspots emerging in South Africa

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