South Africa Property Market Bounces Back Post Election

The South African residential property market has witnessed a bounce in confidence and activity since the conclusion of a peaceful election and the establishment of the Government of National Unity (GNU) in June this year, writes Berry Everitt, CEO of the Chas Everitt property group (part of Leading Real Estate Companies of the World).

Inflation has also declined steadily and now looks likely to remain stable at around 4.5%, the midpoint of the Reserve Bank’s target range, for the remainder of this year – and to potentially drop further in 2025. All indications are that the Reserve Bank will begin lowering interest rates from late September, which will give the market a further boost.

This will be particularly welcome in Johannesburg, where price growth has trailed that of Cape Town for the past five years, showing only 9% growth between 2019 and 2023, compared to 28% growth in Cape Town, according to StatsSA.

The rental market is also improving, with rental growth now close to the annual rate of inflation, and only around 17% of renters in default. The average size of default is also well below one month’s rent.

There is a clear preference among both global and local buyers for gated estates and secure apartment and townhouse complexes, which now account for some 50% of home sales in SA, according to property data company Lightstone.

It have also seen a marked increase in enquiries for luxury apartments in mixed-use developments that offer residents exceptional amenities such as on-site business facilities and good restaurants as well as pools, bars, gyms and padel or tennis courts. Recent examples include Embassy Towers and The Emerald in Johannesburg, and The Pinnacle, The Rockefeller and Capital Mirage in Cape Town.

Cape Town is still the number one destination for UK buyers, with significant communities in areas such as Simonstown, Fishhoek and the Southern Suburbs. However, there are several other parts of the country that are now increasingly popular with UK and other international buyers and investors, including Johannesburg in Gauteng province, Umhlanga and Ballito in KwaZulu-Natal province and the Winelands, Whale Coast and Garden Route in the Western Cape. Of course not to forget the wildlife estates close to the Kruger National Park in Mpumalanga province.

One reason for this is the growing number of expats who are not moving to retire in SA, but rather to work or to seek new business opportunities, especially in and around Johannesburg, which is the financial heart of the country. Confidence in the economy has risen significantly in response to the establishment of the business-friendly GNU, and many international companies have announced new investments in SA.

Some of these are listed in the latest capital expenditure report compiled by the Nedbank Group Economic Unit, which shows that the value of new fixed investment projects announced during the first half of the year increased to an annualised R793,7bn, up sharply from R193,2bn in the same period of 2023.

In addition, the government has replaced the private sector as the major driver of these projects, with plans totalling an annualised R393,3bn as it seeks to urgently address major infrastructure backlogs that have been holding back economic growth.

The latest available figures are that some 212,000 UK expats already live in South Africa as permanent residents. And each year, around 90,000 UK citizens emigrate, with South Africa ranking among the most popular destinations, so this number is expected to keep rising.