Property Market Trends: Average house prices and outlook for 2024

In the face of challenging economic conditions and high-interest rates, property prices continue to grow slowly. The current annual property inflation rate is around 2.41%*, with some outlying provinces like the Western Cape sitting at around 4.8%*.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa expects there to be slow growth in face of the external factors; however, the RE/MAX network continues to surpass his expectations. “Our network doesn’t seem to be allowing external factors to stand in between them and closing a sale. At the end of Q1 2024, our reported sales (live deals) are up 22% on Q1 2023,” he notes.

In the Q4 2023 RE/MAX National Housing Report, it was revealed that the nationwide average price of sectional titles, when reviewed against the figures from previous RE/MAX National Housing Reports, is 9% higher YoY. The nationwide average price of freehold homes, when reviewed against the figures from previous RE/MAX National Housing Reports, is also up by 4% YoY. “Although we don’t yet have the data to review, I am curious to see what the results of the Q1 2024 RE/MAX Housing Report will reveal. I expect that growth will be slow, but the results might still surprise us,” says Goslett.

Other industry experts predict that house price growth will continue to be slow but steady in the year ahead. Paul-Roux De Kock, Chief Analytics Officer at Lightstone, shared three scenarios in the February newsletter, suggesting that HPI in South Africa would likely come in between 1.84% (low) to 2.86% (mid) or 3.57% (high). The low scenario assumes a GDP of 0% and core inflation of 5%, the mid scenario is based on a GDP of 1% and core inflation of 4.5%, while the high scenario, being a best-case scenario, assumes a GDP of 1.2% and core inflation of 3.5%. Lightstone has assumed a repo rate increase of two basis points for the low scenario, an increase of one basis point for the medium scenario, and an increase of just 0.25% for the high scenario.

The FNB House Price Index growth averaged 0.7% y/y in February, slightly lower than the 0.9% in January (revised from 0.6%) (Figure 1). These low levels of house price appreciation should persist in the near term, amid still elevated living and borrowing costs, as well as heightened political uncertainty, both domestically and internationally. That said, our base case view suggests that the house price cycle has bottomed and that the gradual decline in inflation and borrowing costs from 2H24, combined with some employment gains, should modestly stimulate demand in the interest-rate sensitive segments over the medium term, which would support a moderate uptrend in house prices

While these predictions can help us gauge overall property market performance, Goslett reminds homeowners and investors that each suburb will have its own trends that may or may not align with the national averages. “The best way to stay informed about how your property is appreciating in value is to keep in touch with a local real estate agent,” he concludes.

*According to the January 2024 Lightstone House Price Index