Durban and KwaZulu-Natal residents have seen the biggest price growth
Sixteen years ago, at the end of 2001, the average house price in South Africa was R287000. Fast forward to the end of last year and that price was up by almost 300%, to end 2017 at R1.11million.
Surprisingly, historical data calculations from Rode & Associates, based on FNB’s average house prices, indicate Durban and KwaZulu-Natal residents have seen the biggest price growth since then, even exceeding that of Cape Town and the Western Cape.
Comparing the annual growth rates, the figures show the increases from 2001 to 2017 as follows:
* eThekwini: 334% up from R219268 to R952409;
* Cape Town: 332% increase from R360 740 to R1557580;
* Ekurhuleni: 340% up from R225649 to R992906;
* Joburg: 276% increase from R311882 to R1174186;
* Tshwane: 275% increase from R293716 to R1100910;
* Nelson Mandela Bay: 262% increase from R215096 to R778813.
Calculations show the provincial increases in the price of homes to be:
* KwaZulu-Natal: 339% up from R246167 to R1081433;
* Western Cape: 297% up from R365936 to R1452508;
* Gauteng: 287% increase from R278073 to R1075237;
* Eastern Cape: 226% up from R254282 to R829557;
* National: 295% increase from R277821 to R1096322.
Regarding the figures, Rode & Associate’s Kobus Lamprecht says it is important to consider the base effect. At the end of 2001, Cape Town house prices were about 70% more expensive than eThekwini and the Western Cape 50% more expensive than KwaZulu-Natal.
Using the same calculations, but for the 10 years from 2007 to 2017, Cape Town and the Western Cape were “clear winners”.
“This is probably as semigration started to become more prevalent due to the region’s perceived relatively better political and economic landscape.” Cape Town and the Western Cape recorded respective 83.1% and 66.2% increases while house price inflation in eThekwini and KwaZulu-Natal was 37.2% and 47.3%, he says.
2018 is holding promise
House price inflation in South Africa rose in April, following decreases in February and March, according to Standard Bank’s House Price Index.
In January, house price growth was recorded at 5.2%, but then dropped and stagnated at 5.1% in the following two months.
In April, the rate climbed again to 5.3%, and Standard Bank economist Siphamandla Mkhwanazi attributes this to an increase in consumer expenditure on big ticket items and broad economic recovery.
“The improvement in national house prices appeared to track the improvement in other large expenditure items such as passenger vehicle sales, which increased 6.4% year-on-year in April, from 3.7% year-on-year in March.”
Despite the rather slow start to 2018, Mkhwanazi reiterates what economists have been saying all year, and that is 2018 prices will be stronger than in 2017 due to the turnaround in business and consumer sentiment, and gradually easing credit conditions.