Jo'burg comes marching back (as we predicted)

15 months ago, our assertion that the Johannesburg market was set to make a significant comeback as a result of "reverse semigration" from the Western Cape and a "brain regain" as thousands of expats returned to South Africa stirred up quite a controversy.

However, we had evidence that a turnaround was in fact already in progress even then, and this has continued to mount up in the ensuing months - to the point where even our biggest doubters cannot deny that there's something really positive going on in the city that is still the financial heart of the country. The stats now show that:

*Sales are up, boosted especially by first-time buyers. Gauteng draws huge numbers of people from the more rural provinces and is more affordable for those who wish to convert from the rental homes they tend to occupy when they first arrive buying homes of their own. The average home price in Johannesburg has risen from R900 000 to just R1,3m over the past 10 years so it is quite affordable for these first-time buyers, especially since the threshold for Transfer Duty exemption has now been raised to R1,21m. This is underlined by the fact that 36,5% of homeowners in the city are under the age of 50, compared to under 30% in Cape Town, where prices are much higher. 

Statistics from property data company Lightstone also show that while sales in Johannesburg fell from 37 000 a year in 2019 to 32 000 in 2023, they rose back up to just under 35 000 in 2024, and mortgage originator Betterbond notes that Gauteng as a whole still accounts for most home sales in SA, and 48% of all home loans granted in the past 12 months.

*Home prices in Johannesburg are rising, after many years of stagnation due to decaying infrastructure, concerns over safety and large-scale semigration to the Western Cape, especially post-Covid. Deeds office records show that the average sale price in Johannesburg has risen from R1,1m last year to R1,3m in first quarter of this year, and the latest residential Property Price Index compiled by StatsSA shows a year-on-year improvement of 1,8%, compared to a decline of 1,2% six months ago.

Similarly the index for Sectional Title properties has gone from -2,7% to 0,4% and that for freehold home from 0,9% to 4,2%. 

*There is a definite trend of "reverse migration" from the Western Cape to Gauteng, and especially from Cape Town to Johannesburg, mostly for economic reasons. Both rentals and property prices are much higher in Cape Town, which currently has only half the sale inventory available in Johannesburg for the same size population.

Property portal Property24 shows 17 000 home listings in Johannesburg currently, and only 8500 in Cape Town, down from 11 300 last year. And demand remains high, so it's not surprising that the average home sale price in Cape Town is currently R2,1m, or 61% higher than that in Johannesburg.

Meanwhile, totally remote work is also no longer a thing even for the senior staff and management of most of the large corporations and banks with headquarters in Johannesburg, which now require everyone to be in the office at least two or three days a week. But airfares between Cape Town and Johannesburg have increased by 10% in the past year, making it much less appealing to live in Cape Town and be a weekly commuter on this route, especially if one adds the cost of accommodation in Johannesburg for the days in office.    

*Numbers vary, but several sources have confirmed that the number of expats returning to SA, and to Johannesburg in particular, continues to grow, and are now being joined by an increasing number of foreign buyers from the UK, Europe, China and the rest of Africa, with the biggest attractions being the lifestyle SA offers, the relatively cheap cost of living, and the employment and business prospects inherent in the opening up of the vast African market as the African Continent Free Trade Agreement gains momentum. The city is also getting more international exposure as the location of this year's G20 summit, which is expected to generate revenue of around R1,2bn for accommodation, transport and tourism services in the city. On the orders of the President, work to repair the city's infrastructure problems has also been accelerated, and this will benefit residents long after the summit.