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.
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.
|#||City||Median income of first-time buyer in town||Median purchase price|
|1||Pretoria||R37 415||R791 245|
|2||Cape Town||R38 433||R955 061|
|3||Johannesburg||R40 740||R920 106|
|4||Durban||R34 700||R769 179|
|5||Roodepoort||R36 827||R817 557|
|6||Sandton||R55 640||R1 231 666|
|7||Midrand||R40 123||R868 203|
|8||Port Elizabeth||R31 094||R679 364|
|9||Centurion||R51 642||R1 139 697|
|10||Randburg||R46 227||R1 069 536|