The Cape Town and eThekwini municipalities were the main contributors to the 2.2% annual inflation rate for property in metropolitan areas in June 2023.
This is according to the latest Residential Property Price Index (RPPI), released by StatsSA on Thursday, which found that the RPPI for all metropolitan areas increased by 2.2% from June 2022 to June 2023.
Using data collected from the deeds office, StatsSA reported that the City of Cape Town increased by 3.6% year-onyear, and contributed 1.1 percentage points to the inflation.
eThekwini increased by 3.9% yearon-year, and contributed 0.4 of a percentage point.
Annual national residential property price inflation was 2.9% in June, down from 3.2% in May.
The RPPI increased by 0.2% monthon-month in June 2023, StatsSA found.
“The main contributors to the 2.9% annual national inflation rate were Western Cape and Gauteng.
“Western Cape increased by 4.1% year-on-year, and contributed 1.3 percentage points.
“Gauteng increased by 0.9% yearon-year, and contributed 0.4 of a percentage point.”
Regional director and chief executive of RE/MAX Southern Africa, Adrian Goslett, attributed the main drivers of inflation increases to demand and supply.
“When it comes to understanding why house price inflation is higher in some provinces compared to others, the main culprit is demand and supply.
“When demand for housing outstrips supply, prices automatically increase,” Goslett said.
He added that the figures gave homeowners, buyers and sellers insights into what they could expect from their investments.
“For buyers, these averages can provide an indication of how much more a property will cost if they buy in a year’s time from now.
“For landlords and tenants, these averages can provide an indication of what a fair annual rental escalation could be.
“It is important to remember that the national residential property price inflation stats are national averages that speak to greater market trends rather than hyper-localised information.
“Understandably, variations within each suburb can also be expected to make up the provincial average.
“Buyers, sellers, landlords and tenants should keep this in mind when deciding how this information is relevant to them,” said Goslett.
The FNB House Price Index, published last month, showed an average house price growth of 0.9% in the third quarter of 2023, down from 2.1% in the second quarter.
Feedback from its Estate Agents Survey suggested that 67% of listed properties now took three months or more to sell, up from 56% in the second quarter.
“We expect a low house price growth trajectory to continue in the next few months, until inflation and borrowing costs ease more meaningfully. Year-to-date (January to August), house price appreciation averages 1.8%, versus 3.5% in 2022 and our prediction of a 1.7% average for 2023.
“Indeed, year-to-date (January to June), National Credit Regulator data shows that the volume of new mortgage transactions has declined by 18%.
“Compared to (fourth quarter of 2021), at the onset of the current interest rate hiking cycle, mortgage transactions have declined by approximately 24%.
“Nevertheless, the extent of the decline in activity has been relatively shallow compared to the global financial crisis period.”