Where to buy cheap property in SA? - Property24 (2024)

South African property prices grew by 4.3 percent year-on-year (y/y) in February from 6.7 percent in January according to bond originator, ooba.

The February oobarometer price index reveals that the average house price rose to R868 174 from R832 105 a year earlier, while month-on-month property prices increased by 2.1 percent.

The average purchase price among first-time buyers grew by 10.7 percent to R663 092, from R599 105 a year earlier, according to the report.

Saul Geffen, chief executive officer of ooba says this growth is driven partly by the relaxation in deposit requirements enabling first-time buyers to enter the property market.

The average approved bond size increased 10.9 percent to R738 835 from R666 124 a year ago, while the average deposit decreased by 25.1 percent to R129 339, down from R165 981 a year earlier.

The average deposit is now equivalent to 14.9 percent of the purchase price, says ooba.

Geffen notes that a lower deposit size is one of the reasons for the initial bank decline ratio increasing by 2.3 percent y/y to48.2 percent and the effective approval ratio showing a y/y decrease of 2 percent to 62.8 percent.

“A higher proportion of lower deposit applications will typically result in higher decline rates, as they are considered more risky.”

The ratio of applications declined by one lender but granted by another is showing a nominal y/y decrease of 0.5 percent to 22.8 percent of applications.

With banks having loosened purse strings, would-be homebuyers are urged to buy now as homes are affordable.

Young Carr, chief executive officer of Aida notes that the Western Cape where property prices fell 0.3 percent last year is the most expensive province in which to buy residential property.

Cape Town is the city with the highest average price in every home category, even if one excludes the multimillion-rand trophy properties strung out along the Atlantic Seaboard.

Carr says the latest Absa research shows that the prices of small, medium and large “middle segment” homes in the northern and western suburbs of Johannesburg, (where prices rose 5.2 percent last year), often exceed the Cape Town averages for the same categories.

For example, the average price of a medium size home in Johannesburg’s northern suburbs is R1.34 million while the average price of a medium size home in Cape Town is R1.26 million.

Furthermore, the report reveals that there is no one province with the lowest prices in all of the small, medium and large home categories, but that Port Elizabeth is definitely the cheapest city overall.

The average price for a small home in Port Elizabeth is currently around R514000 compared to R593 000 in the central and southern suburbs of Johannesburg, which is the next cheapest area, followed by Durban/Pinetown, where a small home costs an average of R711000, he says.

Medium sized homes in Port Elizabeth, East London and the central and southern suburbs of Johannesburg offer the best prospects for budget-conscious buyers, while the Eastern Cape and the East Rand in Gauteng are currently the least expensive places to buy larger homes.

“It is interesting to note that according to Absa, only two of the nine provinces experienced a y/y decline in property prices last year while some metros actually experienced an above-inflation (real) increase in property prices.”

He points out that the FNB Property Barometer figures show that the y/y increase in property prices nationally was 6.6 percent in January and 6.7 percent in February.

“These are strong indicators that now is the time to buy, before the upward movement of prices starts to negate the benefits of low interest rates, or indeed before interest rates start to rise once more,” says Carr.

The demand for affordable homes continues to drive the property market recovery in Johannesburg’s southern suburbs, says Fanie Viljoen, broker/owner of RE/MAX Superior, which operates in these areas.

Viljoen explains that buyers look for property priced between R800 000 and R1.3 million.

“The simple reason behind this is affordability, which in some cases is taking precedence over security.”

Sectional title homes are fast losing momentum as buyers opt to buy affordable freestanding homes, which can often provide more value for money.

“People are looking for middle-class family homes that have space, but that don’t break the bank.”

RE/MAX says while it is expected that house price growth will remain flat this year, they expect to see an increase in activity in homes priced between R700000 and R1 million.

The agency says they foresee that these properties will reflect the biggest value increase this year due to the demand for properties within this category.

Buyers across the board in the southern suburbs look for three bedroom family homes with features such as a double lock-up garage and staff accommodation.

Stands in these areas vary in size from 800 square metres to 1 200 square metres and offer the buyer good value for money.

He says most of the recent buyers in the southern suburbs were under 35 years, which points to the fact that young family buyers will continue to make their presence felt in the market.

Johannesburg’s southern suburbs have seen considerable development over the last few years due to an influx of investment.

A large number of new developments have been built in a number of the areas and many older houses have been renovated, which means that the number of affordable properties available to buyers has grown steadily.

The majority of the suburbs market stock is freehold homes, which make up over 65 percent of the homes available while the remainder is made up of sectional scheme properties, he says.- Denise Mhlanga