The average house price in South Africa - and what you can get in major cities across the country

The South African housing market is slowing down due to lower demand caused by a weak economy, the higher cost of living and rising interest rates, with the average house price showing minimal growth.

The latest Rode's Report on the South African Property Markets for 2023 said that nominal prices grew by 2.5% in the first two months of 2023 compared to the first two months in 2022, citing data from FNB.

The report said that this shows a slowdown after growth of 4,2% in 2022.

House-price growth has  gradually weakened since the 2020/21 boom, which was made possible by the major dropping in the prime interest rate to 7%.

However, the South African Reserve Bank has continually lifted short interest rates by 4.25% since November 2021 to fight inflation.

Thus, the prime interest rate stands at 11.25%, which is higher than the pre-pandemic level of  10%.

The monthly mortgage instalments for a R1 million property over a 20-year have risen from R7,752 to R10,492, an increase of R2,700 per month.

Most metros in South Africa saw substantial growth in prices in 2020/2021 due to record-low interest rates, however, price growth started to slow down in most major metros.

In Johannesburg, the worst-performing metro, house prices grew by 0.8% from November 2021 to November 2022.

Despite the Western Cape being perceived as the strongest of the major provinces, Cape Town only showed year-on-year (YoY) price growth of 3.3% in November 2022.

eThekwini, Durban's Metro, also only showed growth of 3.7%, down from growth of 4.3% in 2021.

Nelson Mandela Bay was the only metro where house price growth did not slow down in November 2022, with it even beating inflation.

The most recent data from the Oobarometer said that the average house price in South Africa was R1,422,992 for Q4 2022.

This mark only shows 1.5% growth from Q3 2022 and 2.4% YoY growth from Q4 2021.

The Rode's Report predicts that nominal house prices to grow at a slower rate in 2023 and 2024, citing the weak economy, high unemployment, load shedding and increasing interest rates as reasons.

Article Courtesy Business Tech