Residential property prices have steadily increased reaching an above inflationary increase of 5.2 percent y-y in January 2025, or 2.2 percent adjusted for inflation. In real terms, this is the best performarnce in the residential property market since 2020/21 following migration trends post lockdown combined with record low interest rates that provided a temporary boost to the residential market. This growth is led by the Western Cape (8.7 percent) and Limpopo (9.9 percent), that far exceed the national average. Northern Cape appears to be the worst performing province, where house prices have fallen by close to 8 percent. Although there has been a steady improvement in Gauteng, coming off a dismally low base in 2023, property prices significantly lag that shown in the Western Cape.
Stronger property prices are important as it improves homeowners’ çonfidence and financial security. Along with higher property prices, people feel wealthier, and this is referred to as the wealth effect. As homes are worth more, home owners are likely to increase spending in improvements, extensions, or even buy additional properties, that helps drive residential investment. If house prices are rising faster than inflation and the overall national average – as is the case in the Western Cape – it signals strong demand and a stable or growing residential market. This attracts developers and private investors who see better returns, leading to more housing construction and upgrades. It can also encourage banks to lend more for property development. So, in places like the Western Cape, rising house prices are likely to stimulate higher residential investment, boosting the local construction industry and related sectors. Click here to download the full provincial summary including comparative charts and analysis (available to subscribers)
