While house prices rose in several provinces in the second quarter of 2024, only the Western Cape saw an increase in residential property prices when adjusted for inflation.
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This is according to the Q2 2024 Oobarometer report published by Ooba Home Loans, which highlights the most recent trends in South Africa’s property market in 2024.
According to the report, both national and first-time homebuyer purchase prices have increased marginally year on year, by 2.3% and 2.7%, respectively.
Despite the growth, real estate price growth remains negative due to persistently high inflation.
Rhys Dyer, CEO of Ooba Group, noted that, when compared to the previous quarter, the average purchase price for both national and first-time homebuyers has decreased.
The national average purchase price, now at R1 458 924, has dropped by 1.4% in the last quarter, while the average purchase price for first-time homebuyers has fallen by 1.8%, to R1 150 238.
‘This result could be due to potential homebuyers making more conservative purchases pre-elections and pre-interest rate cuts,’ he told BusinessTech
Limpopo, Free State and the Eastern Cape are among the regions with a year-on-year nominal increase in average purchase price, while Mpumalanga, which was previously a strong contender, has slipped into negative territory.
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However, Dyer did point out that the Western Cape saw the most growth in both first-time and repeat-homebuyer categories in Q2 2024.
Property prices in these two categories rose by 7.8% and 6.3%, respectively, and are the only regions to see real (inflation-adjusted) price increases.
The latest CPI inflation data shows that the current inflation rate is 5.1%.
On the other end of the spectrum, KwaZulu Natal experienced the greatest decline in both first-time and repeat homebuyer house prices, with -6.3% and -7.2%, respectively.
Johannesburg and the West Rand are not far behind, with a 2.6% drop from the previous year.
Many experts cite service delivery and investment as the reasons why the Western Cape is the only region to see real price growth in its property market.
According to Henley & Partners’ annual Africa Wealth Report, the number of millionaires in Cape Town will nearly double over the next decade, while the millionaire population in Johannesburg is expected to decline.
Smaller towns in the Western Cape, particularly in the Cape Winelands region, are expected to see an increase in the number of millionaires in coming years.
Over the last decade, the Winelands’ millionaire population has increased by 28%, and this trend is expected to continue into the 2030s.
Additionally, the millionaire population in the Garden Route and the Whale Coast increased by 32% and 35%, respectively, over the previous decade.
Plettenberg Bay, Knysna, and Wilderness are among the notable towns along South Africa’s Garden Route and Whale Coast, which run from Mossel Bay to Storms River.
This trend is also evident in the country’s real estate market, with Cape Town and other smaller towns in the Western Cape experiencing significant growth.
According to the report, one factor contributing to this trend is the emigration of wealthy individuals from Johannesburg due to the city’s declining service delivery quality.
According to the wealth report, millionaires prioritise personal safety, basic service delivery, and political stability when deciding where they live.
Similarly, property strategist John Loos’ analysis for FNB’s 2024 property insights emphasises the significance of municipal and utility service reliability for commercial properties.
The report also mentions how rising municipal rates and utility tariffs are affecting net property income.
Although improvements in electricity supply are anticipated, people are expected to continue relocating to areas with better services, resulting in population shifts for both residential and commercial activities.
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