Despite having become SA’s most populous province, Gauteng is now seeing an increase in emigration-related residential property sales.
The Pam Golding Properties (PGP) Residential Property Report for 2019 notes that emigration-related sales are at a ten-year high this year, and most South Africans who are emigrating are leaving from Gauteng. This is contributing to the subdued Gauteng housing market.
Speaking in Johannesburg last week, PGP CEO Andrew Golding said emigration-related sales are most prevalent in Gauteng. “This is undoubtedly a contributing factor to Gauteng, and Johannesburg in particular, having the weakest housing market in SA in terms of major regions and metros.”
PGP is one of SA’s largest real estate agency groups, with some 1 500 agents across the country – around 400 of whom are based in Gauteng. For its financial year to February 2019, the Cape Town-based group achieved sales turnover of just under R18.8 billion.
Quoting FNB research, Golding says emigration-related home sales overall in SA rose to 13.4% in the second quarter of 2019. This represents a ten-year high.
“While emigration sales are highest for the upper income groups, there has also been an increase in the middle and lower price bands,” he says. “We believe the sales in the middle and lower prices bands due to emigration could reflect people selling their investment or holiday homes.”
Comparing the regions and major metros, Golding notes that despite a marked slowdown in house price growth in the Western Cape, from late 2017 to early 2019 (due in large part to the drought), the province continues to outperform the other regional markets. According to PGP, the Western Cape had average house price inflation of 5.78% from January to September 2019 in nominal terms, compared with a national average of 3.21%.
Average house price inflation in Gauteng and KwaZulu-Natal (KZN) came in at 2.43% and 3.15% respectively, however this was below the national average.
The PGP report said that house price growth continues to lose momentum in Gauteng, while prices appear to have stabilised in KZN and the Eastern Cape (3.43%).
|House price inflation, % (Jan-Sep 2019)|
|Average||< R1m||R1m – R2m||> R2m|
Source: Pam Golding Residential Property Index
In terms of the metros, data from Lightstone shows that the three major coastal cities continue to outperform the national housing market.
Cape Town remains the top-performing metro with 4% growth (between January and June 2019), while Johannesburg is the weakest at just 1.2%. Nelson Mandela Bay (Port Elizabeth) came in at 3.7%, while eThekwini (Durban) and Tshwane (Pretoria) came in at 3.4% and 2.2% respectively.
“The slowdown in Johannesburg is rapid and is showing no sign of slowing or stabilising,” says Golding.
“Tshwane appears to be turning upward, while Gauteng East [Ekurhuleni] is losing momentum, but remains the top-performing metro market in the Gauteng region with 2.9% growth.”
Golding notes that according to FNB, demand for investment properties has been particularly strong in the better-performing coastal metro markets. He says that in Cape Town, investment properties accounted for 10.6% of all properties sold during Q2 2019.
He says the ‘semigration’ trend – which sees business people staying in coastal provinces with their families and travelling to Johannesburg during the week for work – continues to grow in SA.
“Semigration has played a significant part in the growth of the Cape Town and Western Cape property market over the last ten years. Following the drought in the Cape, some of this semigration interest has shifted to the Garden Route and KZN’s North Coast.”
“The semigration trend will continue to the coast, primarily the Garden Route and KZN – Durban and north to Ballito – as well as the Western Cape, including the Boland and Overberg,” says Golding.
“Areas such as Ballito and Knysna, also St Francis Bay, Port Alfred and Jeffreys Bay, which were previously considered holiday hamlets, have become primary residential areas,” he adds.
“On the KZN North Coast, we’ve recently seen as much as 60% of our buyers for new off-plan developments originating from Johannesburg, while Sibaya near Umdloti is also in demand due to its close proximity to King Shaka International Airport.”