Cape Town has outperformed the national average for housing prices following a major increase over the years.
Also read: Cape Town property remain in high demand despite a lack of space
This is according to the latest Statistics South Africa (StatsSA) report, which compared eight metropolitan municipalities across nine provinces, measuring changes in residential property prices via a new set of residential property price inflation (RPPI) metrics.
BusinessTech reports that the RPPI measures the change in prices for houses, townhouses and flats purchased by private individuals. On average, South African property prices have increased by 98% since 2010.
Cape Town is the only province to outperform this spike, presenting a significant 147% increase over the years. The statistics agency notes that price increases in Cape Town ‘have been consistently higher than in other metros [since August 2014]. After remaining relatively flat in 2018 and 2019, prices surged further.’
Ekhuruleni is the only municipality to come close to Cape Town’s growth, with a 94% increase. Tshwane follows closely (91%) along with Buffalo (89%) and Kwa-Zulu Natal (80%). Johannesburg presented the smallest increase (71%) since 2010.
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Taking the information a step further, BusinessTech calculated the appreciation of property in these metros.
If a private individual bought a house in Cape Town for R2 million in 2021, the current value would be around R4.94 million. This translates into R1.34 million more than properties bought in Kwa-Zulu Natal (R3.6 million) and about R1.5 million more than a home in Johannesburg (R3.42 million).
Conversely, if you invested in an R10 million house in Cape Town, it would be worth R24.7 million today, which would be R6.7 million more than a house of the same value bought in Kwa-Zulu Natal (R18 million), and R7.6 million more than one in Johannesburg (R17.1 million).
Yet, the country’s property appreciation is still behind the global average. Adjusted for inflation, real property value in South Africa actually declined by 5%, compared to the 18% average increase of other emerging markets, as found by Lightstone Property.
Senior economist Siphamandla Mkhwanazi says house prices are expected to decrease to around 2% this year, compared to 3.5% in 2022. ‘The impact of weakening consumer finances on house prices has been stronger than anticipated, especially in the higher-end market.’
As per the latest FNB House Price Index, the annual growth of house prices decreased in May to an average of 1.9% and 2.1% in April. According to BusinessTech, this is due to increased cost of living, borrowing and debt servicing, which in turn make houses less affordable, particularly for lower-income groups.
These days, the supply of houses for sale is increasing compared to the demand, causing properties to stay on the market longer. However, the lower end of the housing market still presents strong price growth, while the number of properties valued at more than R5.5 million is decreasing.
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