Gauteng is experiencing growth in demand for residential properties, especially in the Tshwane region, as home buyers prioritise value for money in their investment choices.
In the height of Covid-19, many potential home buyers left the economic centre in search of coastal properties and lifestyle enhancements. However, recent data indicates promising signs of recovery in Gauteng’s residential real estate market.
“There are strong signs pointing to the ongoing recovery of Gauteng’s property market, particularly Tshwane, which has registered notable improvements in the average purchase price, first-time homebuyer demand and the investment property category,” said home loan originator Ooba’s CEO Gavin Lomberg.
According to Lomberg, Gauteng is a point of attraction at the moment because is of its value for money.
“In August 2024, Ooba pinned the average property purchase price in the Western Cape at R1.94m — a price point that many prospective owners simply cannot afford,” he said. “One could speculate that those currently renting through the “higher for longer” interest rate environment may now feel compelled to take advantage of the recent interest rate cut — likely the first of many — and will opt for areas (and regions) where they can get the most value for money.”
FNB senior economist Siphamandla Mkhwanazi said house price trends suggested Cape Town, like other metros, was experiencing slowing house price growth. However, longer-term trends suggest Cape Town has outperformed other metros, including Johannesburg in the past 15 years.
The recent interest rate cut could benefit Johannesburg property, which has had little to no capital appreciation over the past decade, which makes it a buyers’ market at the moment, according to founder and CEO of Landsdowne Jonathan Kohler.
“Despite the uptick in demand for homes in the Western Cape in recent years, Gauteng remains the economic heartland of the SA economy and will thus continue to attract a larger percentage of the country’s working population — particularly young employees (and future first-time homebuyers),” said Lomberg.
According to Lightstone, Gauteng remains SA largest housing market, accounting for 34.7% of the country’s 7.1-million homes and 37.3% of the total R7-trillion in value. Johannesburg is the largest metro housing market within the region.
Lomberg said the affordability of properties in Gauteng could not be disputed. “According to Lightstone, 41.4% of home loan applications currently received are for homes valued at R800,000 and less while a further 29.8% are valued within the R800,000 to R1.5m bracket.”
With the average purchase price for first-time home buyers nationally at R1.15m in the second quarter, Gauteng’s housing market offers an appealing opportunity for prospective buyers.
Lomberg said the average purchase price in Gauteng south and east had surpassed expectations, increasing by 7.6% from December 2023 to August 2024 with an average purchase price paid of R1.16m in August 2024.
“The average price paid in Tshwane has also strengthened from a low of R1.41m in December 2023 to a high of R1.6m in August 2024 — a healthy increase of 13.4%.”
In contrast, prices paid in Johannesburg have strengthened marginally in recent months, rising to R1.44m in August — up from a low of R1.33m in March 2024. “This is encouraging to see as it paints a picture of resilience and we have no doubt that as interest rates decrease, more homebuyers will come to the fore,” Lomberg said.
Gauteng stands an even better chance of capitalising on affordability, according to the FNB residential barometer which said the volume of new-build housing stock was declining on the supply side, mirroring the subdued demand. This downturn was particularly pronounced in the less than 80m2 category, which primarily represents affordable housing.
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