New data from property analytics group Lightstone shows that low-value properties in South Africa are seeing price hikes at rates much higher than other segments.
The group’s annual review of the South African property market shows that national year-on-year house price inflation is at 2.74% for 2022, having decreased consistently since early 2021.
Annual property inflation remained steady in KwaZulu-Natal and Mpumalanga, increased in the Free State and Limpopo, and decreased in the Eastern Cape, Gauteng, North West, the Northern Cape and the Western Cape.
Across different segments, inflation in the Low-Value segment was once again much higher than that in other segments, it said. Inflation for properties in the Low-Value segment was 9.1%, compared to 3.5% for properties in the Mid-Value segment.
Lightstone bases its segments on the following property values:
Inflation in the Low-Value segment has been consistently higher than other bands over the last five years, peaking at 11.8% in 2021.
Lightstone applies the repeat sales methodology when reviewing and reporting on property data. In contrast to ‘average house price’ indices, repeat sales indices provide a measure of the actual price inflation of houses that have transacted twice within a particular period of time.
Although domestic and global headwinds are persisting into 2023, South Africa’s residential property is showing pockets of progress and opportunity, says Hayley Ivins-Downes, the head of digital at Lightstone.
Despite the slight dampening, the most recent comprehensive data from Lightstone points to certain categories of buyers carrying the market, with Mid value and High-value segments carrying the market at 37% and 32%, respectively.
Regionally, the Eastern Cape showed the highest price inflation at the latest point of recording (September 2022), at 7.1%, this was followed by Mpumalanga (6.8%) and Limpopo (6.7%). The province with the lowest inflation rate was Gauteng at 2.9%.
Looking at the country’s major metros, reflecting the provincial position, Nelson Mandela Bay had the highest residential price inflation at 8.8%, while the City of Johannesburg had the lowest at 1.2%: