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• Create Date October 16, 2023
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Residential Property Price Index May 2023 - City of Cape Town shows strongest growth in property prices

Residential Property Prices remained subdued, with a downward revision in the the May publication from an average of 4.3 percent y-y in April, to 3.2 percent, rising moderately to 3.6 percent y-y in May 2023. Price adjustments on average have been weaker in 2023 at 3.5 percent, compared to an average (revised) increase of 4.7 percent in 2022. In real terms (adjusted for inflation) property prices are down 3.3 percent y-y for the first five months of 2023 compared to a 2 percent decline in 2022.  Only three provinces posted real growth in the first five months, Limpopo (8.6 percent), Mpumalanga (4.9 percent) and North West (1.9 percent).  Property prices in the Western Cape recorded an average 1.7 percent decline in real terms, with Gauteng showing the steepest real decline, down 5.4 percent y-y. According to Lightstone, property prices in Limpopo and Mpumalanga are driven by an increase in development, but the fact the average house price is coming off a lower base, compared to Gauteng and Western Cape for example also plays a role. According to Property24, the average selling price for a property in Limpopo is just under R1m on average for 2023, and R1.5m for a 3-bed house, compared to an average of R1.5m in the Western Cape and R2.7m for a 3-bed house. This means property prices in Limpopo are around a third cheaper compared to Western Cape. Plans valued at between R5bn and R6bn were approved in Limpopo during 2021 and 2022, and although demand for housing as declined over the last 12 months approvals for office and retail space increased by more than 30 percent. Limpopo is also the province showing the most robust increase in the Provincial Construction Pipeline, suggesting higher levels of potential investment in the pipeline.

Source: Stats SA, Property24, Industry Insight Calculations

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