There finally seems to be some reprieve in sight for Joburg homeowners, with the latest industry data hinting at a long-awaited recovery in residential property sales and prices.
It’s no secret that many Joburg homeowners have battled to sell their homes in recent years. It has placed huge pressure on property values — in fact, industry players say that in some areas prices have tumbled to 10-year lows.
“Most Joburg property owners have seen real value destruction in the past five to 10 years,” Herschel Jawitz, CEO of Jawitz Properties, tells the FM. “At the upper end of the market there has been a shrinking pool of buyers who are prepared to invest in Joburg,” he says.
That comes on the back of above-inflation increases in municipal rates and taxes, deteriorating infrastructure, semigration to coastal areas and steep interest rate hikes.
However, the good news is that there’s been a noticeable uptick in buyer interest and show-day attendance in recent months.
Jawitz says the group has recorded a 17% year-on-year increase in sales volumes in Joburg for the three months to April. That’s despite the absence of improved economic factors or any other impetus that would typically support buyer demand, he says. He suspects that the increased activity has been driven by value chasers looking to buy now before interest rates start to ease, which many expect could place upward pressure on prices.
Despite what appears to be the start of a revival, Jawitz says buyers remain extremely price sensitive. “The discount between asking and selling price is still as much as 30%-40% in some instances.”
Other real estate groups report similar signs of a rebound in Joburg sales activity. Berry Everitt, CEO of Chas Everitt International, says Joburg’s value proposition is attracting rising numbers of investors, expatriates and even semigrants returning from the Western Cape.
“We have been watching the luxury market in Joburg come strongly back to life over the past six months as increasing numbers of wealthy buyers take the opportunity to acquire high-end properties … at well below market value.”
There’s been a noticeable increase in buyer interest and show-day attendances in recent months.
The group recently sold a four-bedroom penthouse spanning 912m² in Houghton Estate with unobstructed views of the golf course for close to the asking price of R32m. Two other big-ticket transactions with price tags of more than R50m are under negotiation.
Everitt says the strong post-pandemic semigration wave to the Cape has pushed the price differential between Cape Town and Joburg to record highs, which means that moving no longer makes financial sense for many.
Average prices for prime properties in Cape Town of about R103,000/m² are now more than three times the average R33,000m² in Joburg’s wealthiest areas, which experienced the highest exodus of high net worth individuals.
The latest Pam Golding Properties (PGP) residential property index, which tracks provincial price movements, shows that Gauteng house prices have strengthened. In contrast, Western Cape property price inflation, which has outpaced the rest of the country in recent years, is starting to slow.
PGP CEO Andrew Golding says Gauteng prices rose by 2.5% year on year in the first quarter, up from an average 1.3% in 2023, while the Western Cape slowed to 2.9%, down from 5.2%. “These figures indicate that house price inflation in the two regions is rapidly converging,” he says.
In addition, Gauteng recorded a surprise rebound in residential building plans passed in the first quarter, reclaiming top spot as the country’s dominant region for residential building activity.
Golding notes that this comes after the Western Cape overtook Gauteng on the building activity front for the first time on record in early 2022.
Figures from BetterBond point to an increase in home loans in Joburg as well. The city’s northwestern suburbs achieved the highest growth in average home loan value among all regions tracked by the mortgage originator in the 12 months to April, achieving 5.2% growth, vs the national average of 1.2%.
Still, industry players warn that Joburg house prices are unlikely to close the gap with Cape Town any time soon. Jawitz says the best-case scenario is a gradual recovery in sentiment and sales volumes that will translate into better price growth over time.
He argues that the pace of Joburg’s housing recovery will depend largely on two factors: what happens with interest rates over the next six to 12 months and the extent to which Joburg’s local authorities can improve municipal service delivery and infrastructure.
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