Property values in South Africa have declined for the second year in a row, according to a recent report from FNB.
Although property prices have increased, they have not kept up with inflation. South Africa’s annual inflation rate is 4.5% but national property prices have only increased by 3.3% over the last year – meaning they have lost value.
Why is this happening?
Well, the general consensus is that the decrease in value has been caused by an oversupply in the market. In other words, too many people are trying to sell their houses and apartments, and there aren’t as many willing buyers. This is particularly true in major cities such as Johannesburg and Cape Town where large developments seem to be springing up left, right and centre.
It’s not all doom and gloom though. Properties on the lower end of the price scale have increased in value, achieving growth well above inflation.
What does this mean for you?
Well, if you’re a potential buyer, now could be a good time to enter the market. Although, you may want to consider waiting a little while before purchasing. Experts believe that prices will continue to dip for at least a couple of months.
If you’re planning on selling, this isn’t great news. Only 2% of home sellers managed to sell their property for their initial asking price – a 12-year low. The recent trend has seen homes go for roughly 9-14% below their asking price.
Are you renting?
If you’re renting, there’s mixed news for you, depending on where you are in the country.
Rent in the Northern Cape, KwaZulu-Natal and the Free State went up, but it is now cheaper to rent in the Western Cape and Gauteng than it was a year ago. Nationally, average monthly rent declined by R59 in the first quarter of 2019, according to rental payment platform PayProp.
The Western Cape remains the country’s most expensive rental province with an average of R9,030 per month – down from R9,124 in 2018.