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House prices rise for the first time in three months

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April saw South African house prices increase for the first time in three months. The charge was led in KwaZulu-Natal and Gauteng, according to Standard Bank’s house prices index (HPI).

House prices growth improved to 5.3% year-on-year in April after stagnating at 5.1% for each of the previous two months – the first year-on-year increase since the 5.2% growth recorded in January 2018.

“Despite the rather slow start to the year, we still see 2018 house prices stronger than in 2017 due to the turnaround in business and consumer sentiment as well as gradually easing credit conditions,” said Siphamandla Mkhwanazi, Standard Bank’s property economist. “Building and purchasing activity, which were relatively subdued in the past year, will likely benefit modestly from the upswing in business and consumer sentiment, which would likely have to turn out positively on a more consistent basis before the impact filters through to the housing market.”

Regional ups and downs18 San Raphael - Broadacres - Fourways

House prices in KwaZulu-Natal and Gauteng in April experienced year-on-year growth of 7.1% and 6.3%, respectively, up from 6.8% and 5.9% recorded in each of the two provinces in March.

The Northern Cape and the Free State were the pack leaders among the economically smaller provinces, recording respective year-on-year house price growth of 6% and 5.1% in Q1. Standard Bank uses three-month averages to calculate house price growth in smaller provinces as the lower transaction volumes in these jurisdictions can cause monthly price changes to be volatile.

In contrast, house price growth in the Western Cape and Eastern Cape continues to decelerate, while Limpopo and Mpumalanga are still suffering from home price deflation. Western Cape house price growth eased to 3.2% year-on-year in April, down from an upwardly revised 4.2% in March, while those in the Eastern Cape grew just 2.1% year-on-year in April, lower than the downwardly revised 3% year-on-year recorded the previous month.

House prices in the North West showed encouraging green shoots with average prices climbing 1.4% year-on-year in Q1 after a difficult 2016 and 2017. Home prices in Limpopo and Mpumalanga continued their deflationary trend with both provinces seeing home prices decline -1.9% and -1.1%, respectively, during the first three months of the year.

Price band performance

The deflationary trend was also present in the wealthy property segment (those valued at more than R2,6m), which experienced year-on-year house price declines of -6.6% in April. Growth in the affordable segment (those valued at less than R650,000) softened to 2.6% year-on-year in April, from 2.7% the previous month.

Properties in the middle-end of the price spectrum (those priced from R650,000 to R1m and R1m to R1,6m) continued their solid upward trend. These properties, which account for just over 50% of all mortgage transactions in South Africa, saw growth of 7.2% and 10.7% respectively in April. Property price growth at the upper-end of the residential housing scale (R1,6m to R2,6m) eased to 4.3% year-on-year in April, from 4.6% the previous month.

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Standalone properties continued to outperform townhouses and flats with the price of the median freestanding home climbing 7.6% year-on-year in April, versus 6.9% year-on-year in March to R1,049,200. House price growth for flats and townhouses remained relatively flat at 5.8% year-on-year in April, with a median price of R874,700.


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