Johannesburg’s residential property prices are stuck at 2010 levels, which industry experts attribute to declining demand driven by deteriorating infrastructure, crime and unemployment.
Landsdowne Property Group CEO Jonathan Kohler said the city has experienced no capital appreciation since 2010 as financial challenges and poor service delivery deter potential buyers.
“We we are selling properties for the lowest prices that we ever sold them, and it is across the board, from R600,000 to R15m,” Kohler said.
FNB senior economist Siphamandla Mkhwanazi said that, as was the case with any market, residential property prices are ultimately determined by supply and demand. On the demand side, Stats SA data suggests Johannesburg lags well behind Cape Town and eThekwini.
While unemployment remains a national crisis, it has increased in Johannesburg relative to Cape Town and eThekwini between 2014 and 2024, Mkhwanazi said.
“During this period, the number of employed people shrank in Johannesburg, while it grew in other regions. These factors suggest that while Johannesburg is still a preferred destination for those who are searching for economic opportunities it has struggled to produce enough employment to significantly drive demand for home ownership,” he added.
Kohler said Johannesburg was at the bottom of the market. Further interest rate cuts are necessary to stimulate capital appreciation in the province.
Crime and low levels of education are worsening the situation in a city that was once a top destination for job seekers due to its status as an economic hub.
“Cape Town remains a seller’s market, driven by semigration trends, strong capital appreciation and international buyers. However, investors [there] should proceed with caution, as the market’s growth is not sustainable in the long term,” Kohler said.
Previous semigration to KwaZulu-Natal has been stopped by the province’s crumbling infrastructure and a series natural disasters, and people were now preferring to relocate to Cape Town, Kohler said.
Mkhwanazi largely attributes Cape Town’s property boom to semigration, with wealthy people from inland areas boosting demand for housing there. The trend, fuelled by remote work, has helped sustain property prices in the city over the past decade.
Additionally, a weaker rand has made high-end properties more appealing to expats and foreign buyers seeking holiday homes. Booming tourism in the Western Cape has further boosted investment in property, driven by buy-to-let purchases and short-term rental companies such as Airbnb.
“Efficiency and stability of local governments go a long way in attracting investment, both from property developers and end-user investors. Cape Town appears to have led the charge on that trend in the last 10 years or so,” Mkhwanazi said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.