In the second quarter of 2024, the Western Cape stood out as the only province in South Africa experiencing real growth in house prices when adjusted for inflation. This is highlighted in the Q2 2024 Oobarometer report by Ooba Home Loans, which tracks the latest trends in the country’s property market.
National Trends and Inflation Impact
The Oobarometer report reveals that national and first-time homebuyer purchase prices saw slight nominal growth year-on-year, at 2.3% and 2.7% respectively. However, high inflation means real property price growth remains negative. The national average purchase price now stands at R1,458,924, a 1.4% decrease from the previous quarter. Similarly, the average purchase price for first-time homebuyers dropped by 1.8% to R1,150,238. Rhys Dyer, CEO of Ooba Group, attributes this to buyers being cautious due to upcoming elections and potential interest rate cuts.
Regional Insights: Western Cape Leads the Pack
Provinces such as Limpopo, Free State, and the Eastern Cape saw nominal increases in average purchase prices, while Mpumalanga experienced declines. The Western Cape, however, showed significant growth in both first-time and repeat-homebuyer categories, with property prices rising by 7.8% and 6.3% respectively, making it the only region with real inflation-adjusted price increases.
Key Drivers: Service Delivery and Investment
Experts attribute the Western Cape’s strong market performance to excellent service delivery and consistent investment. The annual Africa Wealth Report by Henley & Partners predicts that Cape Town will nearly double its millionaire population over the next decade, while Johannesburg’s is expected to decline. Smaller Western Cape towns, such as those in the Cape Winelands, are also projected to see an increase in millionaires. Over the past decade, the Winelands region has seen a 28% rise in its millionaire population, with similar trends in the Garden Route and Whale Coast areas.
Emigration of Wealthy Individuals
Wealthy individuals leaving Johannesburg due to declining service quality have also influenced this trend. The Africa Wealth Report shows that millionaires prioritize personal safety, reliable services, and political stability, leading to significant growth in Cape Town and other Western Cape towns.
Future Outlook
John Loos, a property strategist from FNB, highlights the importance of reliable municipal and utility services for commercial property. Rising municipal rates and utility tariffs are reducing net property income, prompting relocations to areas with better services. This trend is expected to continue, driving shifts in residential and business activities.
With its strong service delivery, stable investment, and appealing living conditions, the Western Cape is well-positioned for continued property market growth in 2024 and beyond.
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