This 5-bedroom House in Fresnaye, Cape Town is currently on the market for R150 million. Photo: Remax/Property24
  • On average, house prices rose by more than 2% in the year to end-July - despite the initial fall-out of the pandemic.
  • But homes above R1.5 million saw a decline of 0.5%.
  • Property prices in South Africa's coastal provinces outperformed. 
  • For more articles, go to www.BusinessInsider.co.za.

Initial forecasts were that house prices could fall by as much as 14.5% this year due to the coronavirus pandemic, which effectively shut down the property market for months, and triggered widespread job losses.

But the latest numbers from research group Lightstone Property show that the average increase in national house prices was 2.1% in the year to end-July 2020.

Among cheaper homes – those under R700,000 – prices increased by more than 5%.

But homes above R1.5 million saw a decline of 0.5%. Still, this is far from the drop of 6% that was expected for this section of the market this year.

House price growth in different price categories. Source: Lightstone Property

Prices of houses between R250,000 and R700,000 (mid-value properties) saw an increase of 5%, while those from R700,000 to R1.5 million rose by 1.2%. Prices of low-value homes, those under R250,000, rose by 7%.

Property price growth in SA's inland provinces, compared to the coast. Lightstone Property

Properties in the coastal provinces outperformed.

While average house prices in Gauteng only increased by 0.8% in the year to July, the Western Cape (+4.4%), Eastern Cape (+5.4%) and KwaZulu-Natal (+5.0%) saw stronger growth.

House price growth over the past year to July in different provinces. Source: Lightstone Property

“Among (SA’s) major municipalities the coastal municipalities are generally performing better than those inland,” Lightstone said in a statement.

The City of Cape Town saw house price growth of 4% in the year to April - which is much stronger than the 1% seen in Johannesburg and Tshwane - but still far from the 10% seen as recently as 2017.

Last month, FNB said that it expected the pandemic to have a more chilling and lingering impact on activity. “In contrast, the volume of new mortgage applications has rebounded beyond the pre-lockdown levels, and across the price spectrum,” FNB senior economist Siphamandla Mkhwanazi said.

This is thanks to the lowest mortgage rates in almost half a century. With prime at 7%, this means a monthly repayment of less than R8,000 a month on a bond of R1 million.

READ | 100% home loans are booming - here's who can apply

Receive a daily update on your cellphone with all our latest news: click here.

Get the best of our site emailed to you daily: click here.

Also from Business Insider South Africa: