The top 10 South African cities where first-time buyers purchase
While there has been a level of overtrading in the Western Cape housing market, which is slowly losing steam, there is still value to be had in Cape Town. This is according to Siphamandla Mkhwanazi, Standard Bank consumer economist, who was speaking at the bank’s launch of its regional and provincial house price index today.
“KwaZulu-Natal’s house price inflation is struggling to get consistent gains, while there is almost no growth in the Eastern Cape,” he said. “Gauteng, however, has reversed many of its earlier gains.”
Johannesburg: Showed signs of recovery.
Cape Town: Continued to outperform, although steam coming off.
Tshwane: Solid performance, supported by strong demand from first-time buyers.
eThekwini: Some recovery, but still under pressure. Support coming from up-market areas.
Ekurhuleni: House prices took a knock in 2015/16, and now the trajectory points to a recovery.
Nelson Mandela Bay: Prices are dropping rapidly, although not declining (in nominal terms) as yet. The metro is dealing with a water crisis and arguably a dysfunctional municipality.
Andrew van der Hoven, head of Home Loans at Standard Bank, said house price growth had a direct link between the time it takes to pay off a home loan and to get 50% equity in the bond.
“On a R1m home loan, with zero house price growth, it will take around 173 months to get 50% equity in the bond; at 1% per annum growth, it will take 148 months, and at 5% per annum growth, a mere 76 months,” he said. “House price growth has a direct link to wealth creation.
“We support clients on every step of their property journey, assisting them to make sound, well informed decisions based on the research we provide. That next step they take must be done with their eyes wide open so that they are assured that they are making the best decisions,” said van der Hoven, noting that for 2016, Standard Bank’s total loan book was worth R336bn and last year provided home loans to about 47,000 customers.
Top 10 first-time home buying markets by volume
|Suburb||Median income of a first-time buyer in town||Median purchase price||Median price/m²||Median price-to-income ratio|
|2. Cape Town||R38,433||R955,061||R9,067.31||2.2|
|8. Port Elizabeth||R31,094||R679,364||R4,210.52||1.9|