The Eastern Cape has prevailed as the top contender, in terms of residential property price growth, according to ooba Home Loans, as it continues to show robust annual growth in housing prices, peaking at +7.01% in 2022 (January to October), up from +6.35% in 2020 and +6.76% in 2021.
Looking at the key metros, Lightstone’s data from January – October 2022 depicts a healthy 7.8% house price inflation in Gqeberha, in comparison to major metros – Johannesburg at 1.8% and Cape Town at 4.0%.
CEO of ooba Home Loans, Rhys Dyer, says that the average purchase price for homes in the Eastern Cape has increased gradually over the past decade.
“According to ooba Home Loans’ data, the average purchase price in the Eastern Cape rose to R1.73 million in December 2022 – just R78 725 below the average price in the Western Cape. First-time buyers in the province paid an average purchase price of R1.14 million in February – matching the national average price paid by first-time buyers.”
Looking to vacant plots for development, Lightstone indicates that the price of vacant plots more than doubled between 2013 and 2022 and this figure is expected to gain further ground this year, reaching a median sales price of R0.54 million in early-2023.
So, why the demand?
The Eastern Cape is home to popular areas including Gqeberha, East London, Storms River, King Williams Town, Cintsa, St Francis Bay and Hogsback, to name a few.
“The agriculture, renewable energy and automotive sectors are big drivers of the Eastern Cape economy, and the region recorded an employment increase of 20 000 jobs over Q4 2022 as per the Quarterly Labour Force Survey,” continues Dyer. “In Gqeberha, the average household income ranges between R44 000 – R57 500.”
“The homebuying frenzy can be largely attributed to three key factors: 1) homebuyers enjoying ‘more bang for their buck’, 2) further demand for holiday homes in the region and 3) a wave of young adults, most of which are first-time homebuyers, early career professionals and young families, coming into the region. Not forgetting the recent increase in demand for homes from retirees (65-plus), mature (50 – 64) and middle-aged (ages 36 – 49) homebuyers.”
Sectional title versus freehold homes in the Eastern Cape
While the majority of the market comprises of freehold homes (72.5%), the demand for sectional title homes is also on the up. In fact, over the past two years, more sectional title homes have been sold than freehold units.
“The shift towards sectional title properties can be attributed to a host of new developments coming to market and/or the influx of young or first-time buyers who typically purchase a sectional title home for security, affordability and maintenance reasons.”
“We expect the region to remain buoyant over the next few years as the semigration frenzy continues. We also anticipate more development, commercial activities, and government support in the Eastern Cape,” Dyer concludes.