In the face of rising living costs, power outages, and economic challenges, there is a noticeable trend among home buyers, especially first-time buyers, towards seeking affordable housing options, says Dr. Andrew Golding, CEO of Pam Golding Property group.
According to recent Lightstone statistics, a firm specialising in data on property, the majority of first-time buyers are targeting homes within the price range of R700,000 to R1.5 million.
In 2023, South Africa saw a total of 240,888 residential property transfers valued at R257 billion. Central metro markets in Tshwane and Cape Town witnessed the highest number of residential unit sales across all price bands, Dr Golding pointed out.
Further analysis of Lightstone data revealed that a significant portion of house sales in Durban and Gqeberha, approximately 74.2% and 72%, respectively, fell within the price band below R1.5 million.
Other major metros like East London, Tshwane, and Johannesburg also saw a substantial percentage of sales within this range, indicating a strong demand for affordable housing options.
And, over a quarter (26.5%) of residential property sales in Cape Town were in the price category above R3 million, which was double the percentage seen in Johannesburg (11%).
Despite Cape Town's reputation for high property prices, there are still affordable options available, said Dr Golding.
For instance, in areas like the Atlantic Seaboard and City Bowl, studios and micro-units are available below R1.5 million, while larger properties can be found in Northern Suburbs like Welgelegen and Panorama within the R3 million to R5 million range.
In Tshwane, affordable options include two to three-bedroom sectional title units for up to R1.5 million and three to four-bedroom houses with pools for R2 million to R3 million.
Similarly, in Gauteng, various suburbs offer homes below R1.5 million, ranging from three-bedroom houses in East Rand towns to sectional title townhouses in Sandton.
In the R1.5 million to R3 million range, appealing cluster homes and townhouses are available across different areas.
In Durban, homes below R1.5 million include one-bedroom apartments in uMhlanga and Durban North, while options in the R3 million to R5 million range offer attractive family homes in suburbs like Durban North and Glenashley.
Where South Africa’s property value lies
During a seminar hosted by Investec for Intermediaries last year, Prenil Sewmohan, the lead data scientist at Lightstone, offered an extensive analysis of the trends shaping the residential property market, focusing on geographical and demographic factors.
Sewmohan emphasised the significance of distinguishing between the total number of properties and the overall value of housing.
Among the approximately 7 million residential properties valued at R6.6 trillion, freehold properties, comprising over 80% of the total, accounted for 65% of the aggregate value.
In contrast, sectional title homes constituted 12% of the property count but represented approximately 15% of the total value, while estates comprised 7% of the total property count but contributed 20% to the overall value.
Highlighting a concentration of value within a smaller segment of properties, Sewmohan pointed out, "For instance, although only 18% of residential homes are valued at R1.5 million or more, this category contributes to 54% of the total value."
Additionally, Sewmohan noted that approximately 42% of homes are valued below R500,000, constituting only 11% of the total value, while 55% are valued below R700,000.
On a provincial level, Gauteng made up 38% of the total value, followed by the Western Cape at 29% (though only 18% of the volume) – with the latter percentage growing fast, in line with internal migration patterns and urbanisation trends.
David Gracey, Head of Fixed Income at Investec, underscored the prevailing challenges at Eskom and other state-owned enterprises as the predominant theme, along with high unemployment rates and uncertainty regarding the political landscape post-2024.
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