Standard Bank has launched its Provincial House Price Index (PHPI), detailing key insights into provincial market trends across the country.
The PHPI measures price developments for residential properties sold in each province and financed by Standard Bank.
This entails market prices for residential properties being captured, the price of land being included in the price (gross acquisition concept), with prices also covering the acquisition cost of a property, but not transaction costs.
The PHPI differs slightly in scope from the national index in that the former relies strictly on actual market prices, the latter uses the assessment value of properties.
“The Index found that performance in Gauteng in the first few months of the year was largely driven by a robust performance in Tshwane, with first-time buyer demand particularly strong,” said Standard Bank consumer economist, Siphamandla Mkhwanazi.
According to the PHPI, the Western Cape is currently attracting “affluent” buyers, as evidenced by a higher proportion of cash transactions. However, growth momentum has come off in recent months, as middle income buyers are being priced out.
The PHPI reflects the subdued performance in KwaZulu-Natal, where growth has struggled to outpace inflation for some time now. While growth is still subdued in the Eastern Cape, it is showing signs of recovery, partly driven by favourable base effects.
The Regional HPI for the first quarter of this year, meanwhile, shows median prices in Johannesburg rose 6% year on year, whereas prices in Cape Town increased by 13.9%. Delving deeper into the statistics, it showed Tshwane grew faster than Gauteng at 8.8%.
- House price inflation in Gauteng slowed in May.
- The median house price in Gauteng rose to R880,000, which is 5.4% higher than the same period last year, and from a downwardly revised 5.6% y/y growth in April.
- Sub-indices show that this growth was driven by freehold properties, with flats & townhouses still under pressure.
- A median price for a freestanding property in Gauteng was R920,000 in May, while the median price of a flat/townhouse was R850,000.
- Month-on-month, the median price of a house transacted in Gauteng was 0.1% lower in May than April.
- This signals that that the recovery in Gauteng house prices in Q1:17 may be losing steam, as consumers are under increasing financial pressure.
- Although still relatively strong, prices in the Western Cape slowed sharply in May on surging property prices, which may have effectively priced out middle-income and first-time buyers in some areas.
- Estimates show that cash transactions in the Western Cape have surpassed mortgaged-backed transactions indicating that Western Cape now attracts more “affluent” buyers.
- The median house price in Western Cape in May was R1,250,000, 8.6% higher than the same period last year.
- This is 0.5% lower than April, indicating that house price growth is indeed slowing.
- The median price for a freestanding property in the Western Cape was R1,400,000 in May, while that of a flat/townhouse was R938,000.
- In KwaZulu-Natal, property prices in May reversed the gains made in April. The median house price in the region rose 4.8% y/y, to R900,000 from 5.5% y/y in April.
- On a month-on-month basis, however, KZN recorded 0.4% growth in May, same as in April.
- The median price of a freestanding house in the region was R938,700 in May, while that of a flat/townhouse was R850,000.
- This month saw some renewed pressure on freestanding houses, which in the recent past have been enjoying popularity with affluent buyers.
- The Eastern Cape moderated in May, and is still being aided by favourable base effects.
- The median house price in the region was R822,500 in May, up 6.0% y/y.
- The house price index shows that prices in the Eastern Cape bottomed around April/May 2016.
- Positive base effects are expected to fade in the next few months, and therefore it is unlikely that these growth levels will keep up.
- Month-on-month, the province recorded a decline of 0.2% in May, from positive growth of 0.7% m/m in April. The median price of a freestanding house was R870,000 in May, while that of flats/townhouses was R687,500.
Rest of South Africa
- The rest of the provinces have low volumes of property transactions, making it difficult to create a stable HPI per province, and even more so in April, considering the number of public holidays.
- However, the available data shows that house prices in the Free State and the North West remain under pressure, both experiencing house price deflation in nominal terms.
- North West, however, is showing signs of improvement, with house price growth now just marginally below 0% y/y.
- In contrast, Limpopo, Mpumalanga and the Northern Cape have recorded relatively stronger growth. The median house price in these regions was R800,000 in April, recording average growth of -0.3% y/y and 1.0% m/m.