Is the Gauteng housing market through the worst?

After a three-year stagnation, the housing market is staging a comeback. Even Joburg appears to have finally turned a corner.

The country’s economic powerhouse had been particularly hard hit in recent years, with property sales volumes and prices plunging amid crumbling infrastructure and semigration to the Western Cape. 

The latest industry figures show that national house price growth has accelerated to roughly 3.5%-5% — depending on whose data you consider.    

FNB’s house price index, based on sales funded through its own mortgage book, recorded an average 3.7% year-on-year rise in July. That’s still some way off the 7%-8% seen during the mini-boom of 2020/2021, when interest rates were slashed to near 50-year lows, but it’s a significant improvement from 12 months ago, when the index was languishing at below 1%.   

FNB senior economist Siphamandla Mkhwanazi says the latest numbers mark a notable shift: it’s the first time since the fourth quarter of 2021 that house prices are showing real (inflation-beating) growth.    

He notes that housing demand and prices have been underpinned by easing inflation, real wage gains (albeit modest) and lower borrowing costs — the prime lending rate has dropped from 11.75% to 10.5% since September 2024.

Data from other real estate players paint an equally upbeat picture. Lightstone’s housing index clocked growth of 4.5% in July, up from a multiyear low of 1.8% seen in early 2024.

Pam Golding Properties’ residential index shows a 4.4% rise in July, the sixth consecutive month of inflation-beating growth. According to the index, the price band above R3m is achieving the strongest growth at 6.2%, followed by the R2m-R3m bracket at 6%. Areas where houses typically cost below R1m rose by a more muted 3.4% in July.

Mortgage lending has also rebounded. BetterBond reports a 12% year-on-year increase in home loan applications in July, which national head of sales Bradd Bendall says has pushed the group’s volumes to the highest levels in nearly three years. Mortgage lending volumes are now only 8% below post-2020 peaks. 

Meanwhile, the depressed Joburg market is seeing renewed buyer interest as value seekers cash in on what many say are 10-year-low prices. 

The upmarket Joburg areas of Bryanston and neighbouring Morningside emerged as the top two most searched suburbs on Re/Max Southern Africa’s online portal in the second quarter. Durban’s Westville and the Bluff also made an appearance in the top five, alongside Cape Town’s Parklands.

It’s the first time that Joburg and Durban neighbourhoods pipped their Cape Town counterparts to the post. Until recently, the top five most searched areas on the group’s website were dominated by Cape Town suburbs such as Claremont, the city centre and Table View.

Adrian Goslett, CEO and regional director of Re/Max Southern Africa, says the trend points to early signs of reverse semigration, as ever higher house prices in Cape Town force buyers from other provinces to reconsider their relocation plans. He says sustained housing demand amid limited stock has pushed Western Cape property prices beyond the reach of many buyers, especially those coming from provinces where property values trail the Western Cape.

International real estate group Savills expects Cape Town to end 2025 as the world’s top-performing luxury housing market, alongside Tokyo and Seoul

These days, buyers relocating from Gauteng to the Western Cape must typically fork out more than double if they want a property of comparable size and quality.   

The average house price achieved by Re/Max in the Western Cape in the second quarter comes to R3.37m. That’s 130% more than Gauteng’s R1.45m. In fact, Gauteng is now one of the country’s cheapest provinces in which to buy a house, undercut only by the Eastern Cape with an average house price of R1.29m, Mpumalanga at R1.28m and the Free State at just over R1m.   

Still, a deeper delve into Lightstone’s house price movements in individual cities suggests Gauteng is through the worst, with a rising trend evident in both Joburg and Tshwane since mid- to late-2024.

In July, Joburg house prices rose 1.7%, a notable improvement from the drop of 1%-1.5% seen in 2023. Tshwane posted 3%, up from zero growth in 2023, though still well below Cape Town’s 7.4%.

Despite mounting affordability pressures that are pricing many would-be buyers out of the market, Cape Town’s boom shows no sign of losing steam. Industry players say sales stock is becoming increasingly limited, with many listings already under offer by the time they make it onto real estate portals.

That’s especially true for the Atlantic seaboard, the area from the city bowl and V&A Waterfront to Sea Point, Clifton and Camps Bay, which have been buoyed by a post-pandemic wave of international buyers returning to South Africa.

In the city bowl and Sea Point, for instance, few — if any — one-bedroom apartments can still be had for less than R2.5m. The physical constraints on adding more stock to the market in suburbs that lie between the mountain and the ocean will support further price increases.

International real estate group Savills expects Cape Town to end 2025 as the world’s top-performing luxury housing market, alongside Tokyo and Seoul. The Savills world cities prime residential index, which tracks upper-end house prices across 30 global hotspots, forecasts that capital values in all three cities will increase by between 6% and 7.9% in the second half of 2025 (year on year). That compares to a capital value growth forecast of an average 1.5% for the index.    

Other top performers include Sydney, Lisbon, Dubai and Amsterdam. London, New York, Los Angeles, San Francisco and Guangzhou count among the prime housing markets likely to record the lowest price growth this year. Savills says cities that are outperforming have been supported by stock shortages, strong sentiment from both domestic and international buyers and constrained development pipelines. 

Andrew Golding, CEO of Pam Golding Properties, which is Savills’s residential real estate partner in Africa, says Cape Town’s strong lifestyle appeal, a shortage of properties for sale in sought-after areas and last year’s successful elections make it a highly desirable investment destination.

Of course, it doesn’t hurt that hard currency buyers are still getting way more bang for their buck in Cape Town than in most other global capitals. Savills’s data shows that Cape Town apartments will set you back an average €2.600/m².

An apartment in an equivalent area of Sydney or London will cost at least seven times more at €19.700/m² and €18,800/m² respectively. Expect to pay about €14,200/m² in Lisbon, €10.500/m² in Amsterdam and €9,600/m² in Dubai (see table).    

Golding adds that Cape Town’s housing market is starting to buck the historical trend of a sales slowdown in the winter months. In June, the group concluded a record turnover of R240m on the Atlantic seaboard, more than double that recorded in the area in June 2024.  

He says buyers are drawn to this stretch of coastline by its “natural scenic beauty, exceptional lifestyle and wide array of world-class amenities”.   

Ross Levin, licensee for Seeff Atlantic seaboard, says that there has been a hefty 30% increase in the number of R20m-plus apartments sold on the Atlantic seaboard this year. Twenty-two sales in this price bracket have been concluded in the area from January to July, against 17 in the same period last year.    

The average sales price for all apartments sold on the Atlantic seaboard year to date comes to R7.2m, up 14.2% from last year, he adds. The highest price fetched for an apartment in Cape Town so far this year is R65m in The Aurum, Bantry Bay. Additionally, six sales were concluded at the V&A Waterfront for between R22m and R40m, while a penthouse in the Barley Bay building in Camps Bay sold for R36m. That translates into a record R130,000/m² to R170,000/m².

Levin notes that Cape Town continues to attract a mix of local buyers — those semigrating from Gauteng and KwaZulu-Natal — and international buyers, particularly from Germany and the UK.  Returning South African expats are also emerging as a key source market, with many buyers looking to get a foothold in the Cape Town property market ahead of further potential price increases.