The average price of a home in South Africa – and what you can get in Cape Town, Joburg, and more

·2 Oct 2024

The average price of a home in South Africa is around R1.135 million, and the type of home this can afford ranges from a one-bedroom apartment in Cape Town to a three-bedroom house in other provinces.

On September 19, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) announced a reduction in interest rates, a move that has sparked optimism in the property market.

Experts, including Samuel Seeff, chairman of the Seeff Property Group, believe this is a pivotal moment for prospective homebuyers.

After enduring high interest rates for an extended period, the property sector is now primed for a potential rebound.

Seeff has long argued that the elevated interest rates were detrimental to both economic and property market growth.

He emphasised that the high rates had restricted the ability of the market to thrive, making it difficult for consumers, especially first-time homebuyers, to afford properties.

Moreover, the higher cost of borrowing has led to reduced activity in the property sector, with transaction volumes decreasing by nearly 40%.

In light of recent positive economic developments, Seeff believes the SARB’s decision was overdue.

He pointed to several factors that have improved the overall economic outlook, such as the strengthening of the rand, the Johannesburg Stock Exchange (JSE) reaching record highs, and the fact that South Africa has experienced nearly six months of uninterrupted power supply.

These improvements suggest that the economy is in a better position than it has been in recent years, making the case for interest rate cuts even more compelling.

Seeff advocates for a 50-basis point cut in interest rates, although he concedes that a 25-basis point reduction, which is more likely, would still provide much-needed relief to the market.

He anticipates that further rate cuts could be on the horizon, potentially as soon as November, as SARB responds to growing pressure to alleviate the financial burden on consumers and stimulate economic growth.

One of the most immediate benefits of this rate cut is that it could ease the pressure on existing homeowners, many of whom have had to absorb bond repayment increases of between R1,500 and R3,000 per month due to higher interest rates.

This has coincided with an overall rise in the cost of living, further straining household budgets.

For prospective buyers, the rate cut offers a window of opportunity, as they will now face lower borrowing costs, which could stimulate demand in a stagnant market.

According to the RE/MAX national housing report for the second quarter of 2024, the national average sale price for a home was R1,135,000.

A 20-year home loan at an interest rate of 11.50% would result in an average monthly payment of roughly R12,104, according to Absa’s bond calculator.

However, the affordability of this figure varies significantly across provinces. In the Western Cape, where the average home price is R1.65 million, R1.135 million would not suffice for a typical home purchase.

Conversely, in provinces such as the Free State and the North West, where average home prices are R696,000 and R859,000, respectively, this amount would afford buyers properties well above the local average.

The combination of flat property prices and reduced borrowing costs is expected to attract more buyers to the market.

The rate cut could also reverse the value erosion that has plagued the property sector in recent years, with Seeff noting that areas such as Cape Town, which had previously seen price growth stall, may now become more appealing for buyers looking to take advantage of the more favourable conditions.

To give you an idea of what houses can be bought with R1.135 million, BusinessTech chose some houses currently on sale at this price point in Cape Town, Johannesburg, Durban, and Gqeberha.

The houses are listed below.

Cape Town

1 Bedroom Apartment in Woodstock – R1,125,000