By Koketso Mamabolo
The latest property numbers present a fascinating insight into how demand is being shaped by more than just affordability. In May this year, StatsSA released its Residential Property Price Index, the yardstick which measures how the price of residential properties changes at the national, provincial and metropolitan levels, revealing how prices continue to rise.
Annual national inflation was sitting at 6.1% in May, up from 5.8% in April. The biggest contributor was the Western Cape with 9.4%. At the metro level Cape Town contributed the most at 8.1%.
But this doesn’t mean buyers have lost their appetite. The numbers for properties sold to first-time buyers increased by 4.4% year-on-year, evidence that there is still fresh demand despite higher headline prices.
The same is true over the long term. According to BetterBond’s Property Insights, the average home price has increased by 10.7% since 2019. The average home now costs R1.6-million.
And yet, since the fourth quarter of 2023 the number of home loan applications has gone up by 26%.A lower prime lending rate and five successive cuts to the repo rate have driven the 14.6% year-on-year increase in applications. Economists expect inflation to remain at the lower end of the Reserve Bank’s target making it likely that the growth will continue.
With lower borrowing costs the narrative has shifted toward a buyer’s market, at least for the moment. Growth rates for all buyers are lower than the Consumer Price Index and right now residential property is a sound investment and the Western Cape is leading the way.
The Western Cape accounts for 38 percent of the value of residential building plans passed in the country nationally, and the province has recorded double digit figure year-on-year growth.
“The Western Cape has shown greater property appreciation and higher rental yields than the rest of the country due to semi-migration,” says Marc Rodrigues of the Delta Property Group.“The province experienced a surge in demand as remote work increased and people moved to towns that are well run.”
While the beaches and mountain views remain powerful draw cards, people are also looking for service delivery, schools, retail centres, gyms etc. In short, they’re looking for a lifestyle. Whether that be a home in the city, or a holiday home on the coast of a world-renowned tourist destination. Scarborough is an interesting example which highlights a significant trend that is somewhat unique to the Western Cape.
The seaside village recorded almost 70 percent of purchases in 2024 by foreign buyers, according to Lightstone Property. The same is true across the province, and these properties are well above the R1.6-million national average. More than 40 percent of the residential property purchases above R10-million were made by foreign buyers, and the top 22 suburbs in the country favoured by foreign buyers are all in the Western Cape.
Couple this with the rise of the digital nomads and semi-migration and it’s clear why developers are not holding back. Cape Town’s CBD is reaping the benefits. Current estimates by the Cape Central Improvement District value investment at just over R9-billion across 27 developments at various stages. Forty four percent of those projects are residential, and seven are mixed-use, highlighting the demand for urban living, not just little paradises on the Atlantic seaboard.
The country’s largest metropolitan area, Johannesburg, has seen success in gated communities with the perks they bring. Property developer Paul Tedder has found a similar demand for lifestyle-focused properties in the south coast of KwaZulu-Natal, as semi-migration from the province’s north coast picks up due to various factors.
“The value proposition of gated communities is undeniable. They offer peace of mind and sense of community that many buyers now prioritise,” explains Tedder.
When buyers are chasing scenery, rental yields or a lifestyle pivot to remote-friendly towns, they look to the coast. For those looking to settle in the city or its outskirts, Cape Town’s CBD offers many options, with more to come, and the suburbs of Johannesburg remain a compelling option for the schools and proximity to the heartbeat of the country’s economy.
Buyers have more options and Marc Rodrigues advises sellers to price homes correctly to avoid losing out.
Sources: BetterBond Property Brief | StatsSA RPPI | Lightstone Property | The State of Cape Town Central City Report
