14-year blow for homeowners in South Africa’s richest city
Johannesburg’s residential property market has faced a significant 14-year stagnation, with prices remaining at 2010 levels.
According to Jonathan Kohler, CEO of Landsdowne Property Group, this lack of capital appreciation directly results from declining demand driven by deteriorating infrastructure, rising crime, and high unemployment.
The city, once a thriving economic hub, has struggled to maintain its appeal to potential homeowners, leaving property prices stagnant across all market segments.
“We are selling properties for the lowest prices we have ever sold them, and it is across the board, from R600,000 to R15 million,” said Kohler.
This decline underscores Johannesburg’s position at the bottom of the property market, where financial challenges and poor service delivery have deterred buyers and investors alike.
Supply and demand dynamics, as highlighted by FNB senior economist Siphamandla Mkhwanazi, provide further insight into the situation.
While unemployment is a national crisis, Johannesburg has experienced a sharper increase in unemployment compared to other major cities like Cape Town between 2014 and 2024.
During this period, the number of employed individuals in Johannesburg decreased while other regions saw employment growth.
“Johannesburg is still a preferred destination for those searching for economic opportunities,” Mkhwanazi explained, “but it has struggled to produce enough employment to significantly drive demand for home ownership.”
This stagnation in job creation directly impacts the housing market, as fewer people are financially equipped to invest in property.
The challenges extend beyond economic factors.
Crime, low education levels, and deteriorating service delivery have compounded Johannesburg’s woes.
These issues are eroding the city’s appeal and driving migration to other provinces.
Kohler argues that more interest rate cuts will be essential to stimulate capital appreciation, but even this measure might not address the root causes of Johannesburg’s property stagnation.
Data from Lightstone Property’s 2024 report reveals that one in four homeowners who sell their current properties are relocating to a different province.
Gauteng and the Western Cape dominate these sell-to-buy transactions.
Gauteng accounts for 48% of this market segment, while the Western Cape holds a 23% share.
Together, these provinces represent over 70% of the market, with the remaining seven provinces dividing the rest.
The Western Cape, particularly Cape Town, stands out for its ability to retain homeowners.
While the province’s retention rate dipped slightly from 89% to 87%, it remains far ahead of Gauteng, which has seen a 10% drop in repeat buyers choosing to stay.
This trend reflects broader dissatisfaction among Gauteng residents, many of whom are seeking better living conditions elsewhere.
The migration data paints a striking picture.
Pretoria leads the list of towns in Gauteng with the highest number of residents leaving, with over 800 homeowners relocating to other provinces.
Johannesburg follows with 669 homeowners making the move, while Roodepoort accounts for 478 departures. Sandton and Centurion also feature prominently, each losing over 400 residents.
This outflow of residents highlights the mounting challenges Johannesburg faces in retaining its population and revitalising its property market.
The city’s economic struggles, coupled with social and infrastructural issues, have created a perfect storm that deters investment and drives migration.
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