The Western Cape province features prominently in the Pam Golding Residential Property Index, remaining the strongest major regional market with house price inflation of +5.9% in July (2022) and 6.32% for the year to date. While growth in house prices in the other major regions continues to lose momentum, in KwaZulu-Natal house price inflation appears to be stabilising at +5.3% for July and for YTD. Finally, in Gauteng, house price inflation has slowed to +3.1% for July and 3.6% for YTD.
State of the market
“While South Africa’s average national house price inflation rate of 4.41% for 2022 to date is the strongest growth experienced since 2016 – excluding the post-Covid bounce in 2021 – the index continues to lose momentum, slowing to a rate of +3.8% from year earlier levels in July.”
“Nelson Mandela Bay remains the top performing coastal metro market with growth in prices continuing to accelerate, reaching +9.2% in April 2022 (latest available data from Lightstone) – a level last recorded in late-2007. Notably, among the smaller regional housing markets, house prices in the Northern Cape continue to soar, reaching +9.6% in April, while growth in house prices in the Eastern Cape accelerated to +7.9% in the same month,” says Dr Andrew Golding, chief executive of the Pam Golding Property group.
Dr Golding adds that interestingly, selling in order to upgrade was the highest in the Western Cape at 21%, followed by 14% in KwaZulu-Natal and 11% in both Gauteng and the Eastern Cape, according to FNB’s Estate Agent Survey for Q2 2022. The Western Cape is widely regarded to have benefitted most from the surge in demand for larger, lifestyle properties triggered by the pandemic and lockdowns. In contrast to the above trend, FNB data reveals that downscaling due to financial pressure was lowest in the Western Cape (14%) compared with 18% in KZN, 22% in KZN and 23% in the Eastern Cape.
A recent report by FNB highlighted the fact that the Western Cape has also experienced an impressive rise to number one in the country in terms of the total value of residential building plans passed and completed. Focusing instead on the total number of residential building plans completed, Pam Golding Properties Research was able to confirm that during the first half of 2022, the Western Cape accounted for almost half the national total at 47.9%, trumping Gauteng’s 29.5% and KZN’s 9.9%. For residential building plans passed – which provides an indication of future residential building activity – the Western Cape once again claimed the largest share at 37.1% of the national total, exceeding Gauteng’s 28.0% and KZN’s 15.1%.
“Notably, coastal house prices (within 5km of coastline) in South Africa continue to accelerate, rising to +8.3% in April 2022 (latest available data from Lightstone), while non-coastal property prices rose by +4.7% during the same month. According to ooba’s statistics, property buyers continue to demonstrate confidence in the investment opportunities available in the property market, with the recovery in demand for investment or buy-to-let properties continuing, increasing to 7.9% of total loans in July 2022 – a level last seen in late-2009 when the prevailing prime interest rate was 10.5%, down from a high of 15.5% in late 2008.”
“Also positively, despite the recent interest rate hikes, and according to ooba, the percentage of mortgages extended to first-time buyers rose 49.9% in July, which is just under the 50% level seen prior to the temporary post-pandemic boom in first-time buyer activity,” adds Dr Golding.
