BetterBond
The first BetterBond Property Brief for 2024 is in, and there’s some good news for the real estate industry:
- 5.5% – the YOY increase in average home purchase prices
- 4.5% – the average annual real increase in income for ages 31-40, since 2018
- R1.18 million – the average home price for first-time buyers in 2023
Home purchase prices
After solid growth in average home purchase prices between 2019 and 2021, the growth trajectory has flattened slightly, especially for first-time buyers (figure 2). This resulted from the Reserve Bank’s restrictive monetary policy stance, starting in Nov 2021, which saw interest rates rising to their highest levels in 14 years, dealing a blow to homebuyers’ affordability. Against a backdrop of limited housing stock, average home purchase prices have nevertheless kept pace with inflation, recording a 5.5% YOY increase in 2023.
Average annual real increase in homebuyers’ income by age group (2018-2023)
Over the past five years, the 41-50 age group has outperformed its counterparts regarding real income growth (figure 4). This age group traditionally possesses a combination of theoretical knowledge and practical experience that is always in demand, especially in an emerging market economy like South Africa.
All five age groups for which income data is collected outperformed the average real salary growth for the economy as a whole, as set out in the Stats SA Quarterly Employment Survey. The latter figure declined marginally due to the impact of the Covid-19 pandemic.
Average home loan values per region (2023)
Between 2016 and 2019, home loan values grew at an impressive 14% per year (on average, in nominal terms). Since then, the average annual growth rate has declined to 6.6%, which is still higher than the average inflation rate between 2019 and 2023.
The expectation would be for home loan values to climb again once interest rates start decreasing. Home loan values in the Western Cape are 24% higher than the national average.
