“The imminent rate cuts as well as the political stability and expected market friendly economic environment linked to the establishment of the Government of National Unity (GNU) will lend momentum to the recovery in the coming months,” explains Rhys Dyer, CEO of ooba Group.
Purchase prices unpacked “While there are some signs of recovery in property prices, the recurring theme in our Q2 ‘24 statistics reveal that real property price growth remains in the negative territory as a result of still elevated inflation,” says Dyer, pointing to both the national and first-time homebuyer purchase prices which have both shown marginal nominal price growth year-on-year at 2.3% and 2.7% respectively.
“However, when compared to the last quarter, both the national and first-time homebuyers’ average purchase price has in fact dipped,” said Dyer. The national average purchase price, now at R1,458,924, has dropped by 1.4% on last quarter while the first-time homebuyers’ average purchase price is down by 1.8% on the last quarter – now at R1,150,238.
“This result could be due to potential homebuyers making more conservative purchases pre-elections and pre-interest rate cuts.”
The country’s frontrunner, the Western Cape registered the strongest growth in Q2 ‘24 across both the first-time and repeat-homebuyer categories (7.8% and 6.3% nominal increases respectively) and is the only region to record real (inflation-adjusted) increases in property prices. Conversely, KwaZulu Natal saw the largest decline in both the first-time and repeat homebuyer categories (-6.3% and -7.2% respectively).
Regions recording a year-on-year nominal increase in the average purchase price include Limpopo, Free State and the Eastern Cape while Mpumalanga – most notably – a strong contender in the past, has slipped into the negative territory.
In the first-time homebuyer’s category, other strong contenders in the average purchase price include Gauteng South & East, Free State and Limpopo while the Eastern Cape, Tshwane & North West and Mpumalanga have experienced sharp declines.
Meanwhile, the Free State registered the lowest average purchase price overall for Q2 ‘24 at R1.01 million.
Younger homebuyers are spending more In an interesting new development, Dyer highlights growing interest from homebuyers aged 18 – 31. “A greater percentage of younger homebuyers are leveraging property as a wealth-building strategy and are in fact spending more year-on-year,” says Dyer.
“Buyers aged 26 to 30 registered the strongest annual price growth in the average purchase price – at 4.2%- a clear indicator that they are prioritising homeownership and are making financially savvy investment decisions.”
In comparison, Dyer notes that homebuyers aged 37 and older are paying 2.1% less than last year, reflecting increasing financial pressure on households and resulting in some ‘buying down’ to save on monthly home loan repayments.
FNB’s Q2 ‘24 property data attributes approximately 21.7% of home sales to ‘downscaling due to life stage’ and 21.5% of home sales to ‘downscaling due to financial pressure’. “While reasonings vary, we would speculate that much of the activity can be attributed to downscaling to save money, downscaling as a result of children leaving home and downscaling to a retirement estate.”