The long game wins in real estate

Home prices in South Africa have grown by an average of 2,8% in the past year, according to leading mortgage originator BetterBond, which is slightly below the 3,2% year-on-year rate of inflation measured in February.

However, four out of nine regions in South Africa are now showing real (after inflation) home price increases, which is a good indicator that the market is gathering strength.

Mpumalanga was the best performing region over the past 12 months, with a 5,1% year-on-year increase in average home prices, and was followed by North West, Eastern Cape and Western Cape.

The actual average home price stood at just under R1,6m at the end of February, which was 0,5% down on the same month of 2024, while the actual average home price for first-time buyers was R1,25m or 2,5% more than in February 2024.

Read more: Ending the year with a flourish

The BetterBond statistics also show that over the past five years, house prices have increased at an average annual rate of 5,5% for all buyers and 6% for first-time buyers.

This means that while prices have not always kept pace with inflation, especially in 2022 and 2023, when the CPI soared to almost 7%, investing in residential property remains an attractive proposition in the medium to long-term.

This is underlined by figures from property data company Lightstone which show that the average nominal home sale price rose from just under R150 000 in 1994 to R1,4m in 2024, or by 833%, which was 381 percentage points ahead of inflation over the 30-year period.