Pretoria - The rate of increase in average house prices in Gauteng has slowed from 9.3 percent at the end of 2012 to 2.1 percent in the third quarter of this year.
A new report on provincial house price indices published by First National Bank (FNB) said yesterday that average house prices in Gauteng had slowed further in the third quarter from 2.7 percent in the previous quarter.
FNB said the Western Cape remained the most expensive with an average house price of R1 256 372 followed by Gauteng at R1 016 804 and KwaZulu-Natal (KZN) in third at R988 142.
John Loos, a household and property sector strategist at FNB, said despite the Western Province and Gauteng on average being the most expensive in terms of house prices, they were not the least affordable.
Loos said these provinces had by far the highest per capita and per household incomes. The Western Cape, according to estimates by IHS Global Insight, had the highest per capita household income of the major regions at R245 788 last year.
Loos said Gauteng was not far behind at R229 192, with KZN significantly lower in third at R173 103. But Gauteng had the highest per capita income last year at R72 951, followed by the Western Cape at R70 628 and KZN at R42 702.
Loos said this translated into these two provinces being the most affordable when measuring affordability in terms of house prices relative to per household income.
However, Loos said the affordability of houses in the Western Cape had deteriorated more noticeably than the rest of the provinces in recent years, which was possibly starting to slow its house price growth.
Loos added that the growth in the house price indices of all the major regions slowed year on year in the third quarter.
Gauteng was not the weakest province in terms of house price growth with the house price index for the minor provinces, such as Mpumalanga, Free State, Northern Cape, North West and Limpopo, rising by a mere 0.8 percent year on year in the third quarter, while the Eastern Cape had the slowest growth rate of 0.1 percent.
Average house prices in KZN were also on a slowing trend at 4.2 percent in the third quarter.
Loos said the Western Cape, with year-on-year house price inflation of 10.5 percent, was the strongest performing province “by far”.
“Through 2015 and early 2016, the Western Cape housing market bucked the broader national trend, strengthening for much of the period, while the rest of the country trended weaker. We believe this was due to the province reaping the benefits of the strongly positive perceptions that had built up for being the province with a combination of good lifestyle, well run and with very good economic opportunity,” he said.
Loos said the Western Cape, unlike the other provinces, also had a strong “net inward migration” of repeat home buyers, which might have provided some additional support.
BUSINESS REPORT