CAPE TOWN – House price growth in the Johannesburg metropole continues to decline rapidly, Pam Golding Properties chief executive Dr Andrew Golding said in the group's annual review of the property market yesterday.
He said metropolitan housing markets were showing diverse trends in Gauteng, which was currently the weakest housing market of the major regional markets in South Africa.
The Tshwane house market appeared to be turning upward, while Gauteng East was losing momentum, but remained the top performing metro house market in the province.
Real average national house price inflation stayed negative this year, for the fourth year in a row. The Western Cape was the only region where this remained positive, for the seventh consecutive year.
RE/MAX of Southern Africa chief executive Adrian Goslett said the gap between the inflation and house price growth was narrowing – Standard Bank reported national house price growth to be 3.9 percent in July, just below the inflation rate of 4 percent.
“The ebbs and flows of the market will even out over time to yield a stable and substantial return, when it eventually comes time to sell,” Goslett said.
House price inflation from January to June was 4.9 percent in Cape Town, 3.7 percent in Nelson Mandela Bay, 3.4 percent in eThekwini, 2.9 percent in Gauteng East, 2.2 percent in Tshwane and 1.2 percent in Johannesburg, Dr Golding said.
The three coastal metros continued to outperform the national market. Coastal properties – homes within 500 metres of a coastline – enjoy a price premium which had risen from a low of 0.9 percent in September/October 2018, to 2.13 percent in June 2019.
Dr Golding said unless there was greater clarity on the prospects of a recovery in the local economy, the housing market was unlikely to enter another fully fledged recovery.
The turmoil of Brexit, the trade war between the US and China, and a downturn spreading across Europe was threatening to become a global recession. House sales of 197 634 units was 6.1 percent below the 2015 peak in South Africa, he said.
According to Lightstone, 29 percent of all house sales in the 12 months to end September 2019 were in the lower price category, or below R400 000, while 16 percent were in the R1.5 million to R3m category, and only 5 percent were priced above R3m. Nearly 80 percent of all properties sold in the past 12 months were priced below R1.5m. According to FNB, the middle-income categories continue to see growth in unit sales from year-earlier levels, while the lower and upper ends continue to contract,
The decline in lower end was due to a deterioration in affordability and high levels of unemployment, while the upper end was impacted by the loss of confidence and the fact that many sellers could not afford to sit-out the market down-cycle, said Dr Golding.
Citing data from Lightstone, Dr Golding said: “The Cape market appears to have reached a modest turning point, with house inflation rising from a recent low of 4.97 percent in May 2019 to 5.12 percent in September.” The Western Cape continued to show the strongest house price growth as a region, across all three price bands.