In current times, data-driven insights are increasingly used to reveal trending patterns, which can be used to make informed decisions. Such data also allows industry players to make educated predictions, especially about property values and the drivers that influence those.
Lightstone Property, is a leading provider of comprehensive data, analytics and systems on property (as well as automotive and business assets). It uses its unique and proprietary datasets to build sophisticated analytics and spatial models, which guide clients in managing risk and making business critical decisions.
Hayley Ivins-Downes, Managing Executive Real Estate, Lightstone Property answers questions about what industry stakeholders, buyers and sellers, and renters can expect in 2025.
Q: Do you believe that 2025's residential property sales will grow, and if so, is this purely due to interest rate cuts?
We would anticipate property sales to grow in the Western Cape and in pockets elsewhere, particularly in coastal areas which lend themselves to remote working and the relocation of small business owners and their families. Safety, lifestyle and work-life balance are the main drivers, along with better municipal services.
Our 2024 survey of estate agents revealed that only a third reached their sales targets in terms of volume and value in 2024, slightly down on numbers recorded in 2023. But expectations are higher for 2025, with 86% of Estate Agents anticipating they will reach volume targets, and 85% saying they’ll reach value targets. They say they expect younger buyers will play an increasingly important role in South Africa’s residential property market in 2025, as will unemployment and political certainty.
Q: Where do you envisage the most growth to be realised? (eg: could it be regional sales, first-time homebuyers, development sector, downsizing etc).
Generally, expect the growth in Sectional Title and Estates to continue because they offer lifestyle and safety benefits. Overall, we expect sales values to grow in coastal regions and towns and cities in the Western Cape. Sales volumes of entry level houses depend on finance and employment.
It’s worth noting that 95% of value in the residential market was under R4-million in 2024, and the largest house price band was under R500k. This emphasises the importance of entry level, and lower to middle class housing in the country.
Residential property stock registered at the Deeds Office has more than doubled in South Africa’s first 30 years of democracy, rising from 2.7m units in 1994 to around 7.2m in 2024. Data from the Deeds Office indicated that much of the new residential stock added between 1994 and 1998 was RDP/subsidised housing.
Q: What are the economic factors that are still in play that affect home buying (eg: unemployment, nomadic work, lifestyle changes)?
Interest rates are a primary driver, but other factors include the general state of the economy, political and economic confidence, and service delivery, from roads, electricity and water to municipal services. All these factors influence the ability to repay home loans and the desire to purchase a home. The general state of the residential market in South Africa, as in other markets, ultimately depends to a great extent on the middle and lower middle classes, and these consumers are among the more financially distressed. Estate Agents say lifestyle and amenities is the single most important factor when it comes to what buyers are looking for:
Data from Lightstone’s 2024 Estate Agent survey
Q: Are home values expected to increase, and/or more homes up for sale?
Home values will increase as confidence rises and demand grows. Value will inevitably rise where demand is strongest, such as in many Western Cape towns.
In 2024, sales valued at >R30k amounted to around R294-billion (2023: R291-billion), while the average value of properties sold for more than R30k was R1,419,468 (2023: R1,401,077). Both the total sales value and average price over 2024 and 2023 are indicative of a flat market, and we only anticipate that changing when the external factors become positive. The Western Cape accounted for the top 27 suburbs with at least ten sales where the average price paid was more than R10-million. Bishopscourt, Clifton and Bantry Bay recorded sales of R50-million.
National year-on-year house price inflation in November 2024 stood at 3,7%, showing a slight decrease from the previous month. On a provincial level, annual property inflation increased in KwaZulu-Natal, North West, Mpumalanga and Northern Cape while it had decreased in the Eastern Cape, Free State and Limpopo compared to the previous month. Gauteng and Western Cape remained the same. Annual property inflation for the Low-Value segment remained at 13,2%,
High-Value and Mid-Value properties stayed stable at 3% and 4,1% respectively, and Luxury properties showed a slight increase to 3,8%. HPI overall, however, has come off its eight-year peak of around 6% in 2020/2021.
Q: Semigration and reverse semigration patterns?
As indicated earlier, it is likely that demand will continue to rise in areas which remote workers choose to live in (coastal towns and smaller inland towns). Apart from remote workers, others relocating include small business operators who are also opting for lifestyle and safety offered by coastal / smaller inland towns, which often also offer better municipal service delivery.
