National house price inflation in South Africa has inched higher in Q1 2024, rising to +3.1% in March 2024, with anticipated lower interest rates later this year and stronger economic growth likely to boost both market activity and house price growth only in late-2024, according to the latest Pam Golding Properties Residential Property Index.
“Notably, with Western Cape house price inflation slowing markedly – at +2.9% in March 2024, growth in Gauteng prices continues to strengthen – currently at +2.5%, indicating that house price inflation in the two regions is rapidly converging," said Dr Andrew Golding, chief executive of the Pam Golding Property group.
Meanwhile, national house price inflation (HPI) in the lower price band, below R1 million, continued to accelerate in March 2024, rising to +7.9%, he said.
“Furthermore, the rebound in coastal house prices continued in December 2023 (latest available data), rising to +6.7%, while non-coastal HPI slowed, resulting in the coastal vs non-coastal price premium widening further, to +5%, a level last seen in mid-2005.”
Investment properties
Dr Golding also noted that the surge in demand for investment or buy-to-rent properties continued in March 2024, lifting the Q1 2024 average to 12.5% of applications, compared to just 8.3% in Q1 2023. Applications are most notable in the Western Cape.
The property expert said that banks remain supportive, with improved pricing, higher loan-to-value ratios and still elevated approval rates.
“However, with household finances impacted by elevated interest rates, rising fuel prices and a sluggish economy, the demand from first-time buyers has dampened," he said.
According to ooba Home Loans, the overall price paid by first-time home buyers rose to R1.17 million in Q1 2024, +4.8% higher than Q4 2023 and +3.1% above year-earlier levels.
Ooba’s records reveal that the overall price paid by home buyers averaged R1.48 million in Q1 2024, also reflecting an increase of +3.1% from year-earlier levels.
Semigration
Despite the influx of semigrants to the Western Cape and the growing demand for properties among property investors there, Gauteng has regained its top spot as the largest market for planned residential building activity, as developers continue to identify demand for homes in Gauteng.
Dr Golding said the three largest provinces – Gauteng, the Western Cape and KwaZulu-Natal – account for almost 80% of all residential property sales in the country.
Semigration
There have been two waves of semigration – predominantly from Gauteng to the Western Cape between 2016 and 2018 and then again after the pandemic, which is visible in the shift in the share of property sales during these periods, said Golding.
"Nonetheless, Gauteng maintained its majority share, accounting for nearly 40% of all sales in 2023 – unchanged from 2010. In contrast, the Western Cape has seen an increase in its share while KwaZulu-Natal has seen a small decline," he said.
Semigration slowed during the course of 2023 after reaching a record high of 14% of all sales during the second half of 2022 – the highest percentage on record.
However, it has rebounded once more in Q1 2024 – up from 10.9% in Q4 2023, said Golding. Semigration averaged 13.2% in 2022 and 11.8% in 2023, according to the FNB Estate Agent Survey.
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