The latest Residential Property Price Index (RPPI) published by StatsSA underlines the clear preference among homebuyers for well-run cities and freehold homes but also shows the attraction of employment opportunities and sectional title homes, especially for young, first-time buyers.
The RPPI shows that the national average property price growth rate was 6,1% in May this year, which was 0,5% up on the previous month – and almost double the 3,4% achieved in 2024.
Notably, this rate of increase is also well ahead of the current inflation rate of 3,3%, which means that property prices overall are showing real (after inflation) growth for the first time in several years. This is largely due to increased demand as a result of several interest rate cuts over the past year, which have taken the prime rate from 11,75% to 10,25% and made it easier for prospective buyers to qualify for home loans.
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However, above-inflation increases are not being achieved everywhere. In the Western Cape, for example, annual price growth stood at 9,4% in May, while that in Gauteng only reached 2,9% and that in KwaZulu-Natal, the worst performing province, at just 2,4%. Consequently, as the latest figures from mortgage originator BetterBond show, the average home price in the Western Cape now around R2,1m, while that in Gauteng is around R1,6m and that in KZN around R1,5m.
Very high property price growth rates in other provinces such as Limpopo (12,3%) and North West (9,2%) can mostly be attributed to the rise in commodity prices and the rapid expansion of mining activities in these regions, combined with a shortage of available homes for those relocating in pursuit of the resulting employment opportunities.
Zooming in on metropolitan areas, which is where the bulk of property transactions take place, the RPPI shows that the average annual property price growth rate is 5,1%, with the City of Cape Town reaching 8,1%. Others doing relatively well are Ekhuruleni (4,6%) and Nelson Mandela Bay (4,1%) while both Johannesburg and Tshwane continue to underperform at around 2,4% - despite the fact that Gauteng is the financial heart of SA and the biggest generator of business and employment opportunities. This clearly illustrates the destructive effect of bad governance and decaying road, power and water networks, as currently experienced in Johannesburg especially, on property values and the potential for growth.
Meanwhile, the RPPI also shows that the prices of preowned properties are rising faster (5,9%) than those of newly built properties (4,4%), and that the prices of freehold properties are increasing faster (5,6%) than those of sectional title homes (5,2%).
This means that new sectional title homes are still the best option for first-time buyers in terms of affordability, especially if they are located in one of the live-work-and-play developments that are becoming so popular. Here buyers can make further savings on transport costs while enjoying excellent security and a range of entertainment, wellness, business and retail amenities either onsite or within easy walking distance of their homes.
