The Eastern Cape is plagued by slow population growth and high proportions of non-economically active people, and this is not only bad for the province’s economy but its property market.
Although the small towns are punching above their weight in property sales, the province has a declining population largely because job seekers leave for other regions, particularly the Western Cape.
And when they do, they leave behind high proportions of children under the age of 14, and elderly people, says Hayley Ivins-Downes, head of digital at Lightstone Property.
Data shows that more than a third of those left behind are children – the highest proportion in the country, while the Eastern Cape also has the highest percentage of older people, with 11,6% compared to the national average of 9,2% and 10,7% in neighbouring Western Cape.
The graphic below shows how the Eastern Cape lags Gauteng in terms of proportion of adults aged 25 to 39, but outstrips Gauteng in terms of both children under 14 and the elderly.
Ivins-Downes says the Eastern Cape is South Africa’s second largest province by size, and fourth largest in terms of population at 6,7 million people. However, its population grew by just 2% over the past 11 years compared to the national average of 17%. StatsSA data shows that, over the past 20 years, the province’s share of South Africa’s population has fallen from 14% in 2001 to 12,6% in 2011m and down to an estimated 11% in 2022.
Population impact on property market
While population growth leads to an increased demand for properties, and could also then see higher property price growth, dwindling populations could result in the opposite. The Eastern Cape market, however, appears to be ticking over as a result of a number of young professionals and first-time homebuyers moving to the region. Here, buyers can get more bang for their buck.
Residential property sales transactions in the R200,000 to R20m price band amounted to R10 billion in 2022 – and while nearly two-thirds of the sales were recorded in the cities, average sales prices were highest in Cape St Francis (R2.4m) and St Francis Bay (R2.1m). This was followed by Sea View, Kenton-on-Sea, and Port Alfred (around R1.5m).
The Eastern Cape’s major cities, Gqeberha and East London, along with popular surfing town Jeffrey’s Bay, accounted for 62% of the province’s residential property sales by volume in 2022 – but average sale prices were highest in smaller coastal towns buoyed by the second holiday home market and a growing demand from remote workers keen for a better quality lifestyle, Ivins-Downes says.
As the graph below shows, the average value of houses in the province is highest in smaller towns:
The average sales price in East London was R1,4m, higher than Gqeberha at R1,2m – although the latter accounted for more than double the sales volumes, but both were lower than the average in Cape Town at R2,7m, Lighstone data shows. Gqeberha is also lower than George at R2,3m and Durban at R1,3m.
The property market in the Eastern Cape lags Gauteng in terms of value, Ivins-Downes states, with 12% of Gauteng properties valued at above R2m but only 4% in the Eastern Cape making the cut. The five-year churn in the R200,000 to R20m band was only 8% in the Eastern Cape compared to 17% in Gauteng.
“There are towns and cities with a significant number of properties valued above R2m, but with a solid component of mid-range properties they don’t feature in the highest average list. The 32 000 properties exceeding R2m in value are spread widely along the coastline.”
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