These are South Africa’s 10 most popular cities for first-time buyers with average prices

The Western Cape is still the dominant housing market in South Africa but it is becoming increasingly unaffordable for first-time buyers.

This is according to Standard Bank’s latest regional and provincial house price index.

“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 Provincial House Price Index (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.

First-time buyers

House price growth has a direct link between the time it takes to pay off a home loan and to get 50% equity in the bond, according to HomeTimes citing Standard Bank’s data.

“On a R1 million home loan, with zero house price growth, it will take around 173 months to get 50% equity in the bond; at 1% per annum growth, it will take 148 months, and at 5% per annum growth, a mere 76 months,” said Andrew van der Hoven, head of home loans at Standard Bank.

“House price growth has a direct link to wealth creation.”

He highlighted the median income of a first time buyer as well as the media purchase price of across South Africa’s 10 most popular cities for first-time buyers.

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