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Residential Property Price Index January 2024 - North West Province surpass national average house price growth

Various factors influence property prices, including economic conditions (such as economic growth, employment rates, wage levels, and population growth), interest rates, the availability of credit, inflation (which affects affordability), supply and demand dynamics, and government policies (such as tax incentives and zoning laws). Location and market sentiment also play significant roles.

In the South African context, the COVID-19 pandemic induced notable shifts, particularly in semigration trends. Due to persistent poor governance in provinces like Gauteng, many people have moved to what they perceive as better-managed provinces, such as the Western Cape. This migration surge occurred when interest rates were at a historic low of 7 percent. Poorly managed municipalities and metropolitan areas directly affect investor sentiment, thereby influencing housing demand. Over the past few decades, there has been minimal improvement in local governance. The highest demand is among low to middle-income earners, where the strongest price growth is often observed. For instance, the average property price for a three-bedroom house in the North West Province is approximately 56 percent lower (average of R1.25 million) compared to a similar property in the Western Cape (average R2.75 million), where property price growth significantly exceeds the national average.

Residential property prices remained subdued, averaging a 1.9 percent increase in 2023, with no change noted for January 2024. In the Western Cape, property prices showed some recovery, with the North West Province experiencing the strongest gains. Western Cape property prices continued to outperform those in Gauteng, with Ekurhuleni showing the best performance among all Gauteng metros. Buffalo City demonstrated a stronger recovery compared to Nelson Mandela Bay in the Eastern Cape. Conversely, house prices in KwaZulu-Natal fell by an average of 2 percent, with similar declines reported in Mpumalanga (following robust growth in 2022/23) and the Northern Cape.

The North West Province is currently outperforming the other eight provinces, with average nominal property prices up 9.5 percent year-on-year as of January 2024. Despite a lack of private sector investment and a 24 percent year-on-year decline in approvals over the past 12 months, governance remains crucial for restoring deteriorating infrastructure. The then-acting North West Premier, Nono Maloyi, made numerous promises in February 2024 to improve economic infrastructure delivery across the province in 2024/25. The transfer of roads to SANRAL aims to enhance road infrastructure, stimulating and improving economic performance. Despite 8,000 housing units remaining incomplete as of June 2023, the acting Premier announced plans to address the housing crisis, including a R2.6 billion mixed development in Ventersdorp. Following the election, Lazarus Mokgosi was appointed as the new North West Premier. Despite being implicated in a 2016 forensic investigation related to irregularities, he is now responsible for implementing these ambitious plans.

 

Source: Stats SA, Property24, Industry Insight Calculations

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