Good news for property owners in South Africa – except in three major cities

The latest Residential Property Price Index from Stats SA for March 2024 shows that property price inflation is showing an upward trend, providing some relief for homeowners in the country who have faced flat or declining rates in the past few years.

However, the prospects are not great in some of the metros, with the City of Joburg, eThekwini and Nelson Mandela Bay showing year-on-year declines.

For existing homeowners, inflation is a positive development as the value of their properties goes up, resulting in higher sale values. However, for those looking to enter the property market, it may prove more challenging.

For March 2024, national house price inflation stood at 3.5%, up 0.4 percentage points from 3.1% in February.

Year-on-year, this was up significantly from 2.1% in March 2023.

Average property price inflation in 2023 was 2.2%, which was a start contrast to relatively higher rates of 4.8% and 6.6% in 2022 and 2021, respectively.

Last year was a challenging one for the property sector, with record levels of load shedding, high inflation and interest rates at 15-year highs keeping the market depressed and consumers under deep financial pressure.

However, prospects for 2024 show a turn, with prices gradually increasing and the prospect for interest rates to be cut soon—economists anticipate the start of the cutting cycle as soon as next month (September).

The turning trend is not across the country, however.

Looking at inflation rates across provinces and metros, it’s clear that a big driver of national inflation comes from the Western Cape, where price inflation sits at 7.7%. This is followed by the North-West, with inflation at 5%.

Conversely, the Northern Cape and Limpopo have seen property prices drop (by 4.8% and 2.3%, respectively), which is not great news for homeowners in those provinces.

Breaking the trends down by metros provides another twist.

While the City of Cape Town has high price inflation at 5.7%, Buffalo City actually shows the highest price growth.

Nelson Mandela Bay, eThekwini (Durban) and the City of Johannesburg, meanwhile, are all showing year-on-year declines.

This likely reflects the massive problems that have best these cities on a local level. eThekwini has suffered a major infrastructure collapse over the past year after being battered and beaten by storms—and in the CoJ, perennial neglect and maladministration by a revolving door of political leaders have resulted in the city also being on the verge of collapse in service delivery and infrastructure.

Other insights in the data show that price inflation also varies depending on the type of residence being sold.

For first-time sales, the City of Ekurhuleni comes out on top with the index sitting at 14%, marking an expensive entry into the market in that region.

For resold properties, the City of Cape Town carries the highest inflation at 5.5%

Sectional title owners in Cape Town, the City of Tshwane and Buffalo City would have seen the highest inflation at 5.0%, 4.4% and 4.1%—while freehold properties are highest in Buffalo City (8.8%).

Property experts noted in April that they were starting to see an uptick in sales in the first quarter of the year, marking a turnaround in the market. However, this came with he warning that the recovery is likely to take longer than elsewhere in the world.

Century 21 South Africa CEO Harry Nicolaides said the positive phenomenon was being driven on optimistic market sentiment alone, and despite the high interest rates.

This bodes well for the rest of the year as the post-election boost in confidence and markets in South Africa are continuing, while interest rates are expected to start coming down soon.

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