The total value of bonds granted by ooba Home Loans for new developments has quadrupled since 2021.
To back this up, recent data has indicated that a significant number of South Africans are preferring to build new homes with StatsSA’s latest figures pointing to a strong interest in new builds with the total value of new residential building plans approved in 2022 recovering to the pre-Covid-19 levels – and many of these new building plans (particularly by first-time homebuyers) are located in residential developments.
The Western Cape accounted for more than a third (33.7%) of the value of all residential plans passed in South Africa during 2022, followed closely by Gauteng (30.8%) and KwaZulu-Natal with 15.6%.
“However, if the recent robust rate of growth in the value of residential plans passed in the Western Cape, relative to Gauteng, is sustained, the Western Cape will continue to dominate the new residential housing market in years to come,” comments CEO of ooba Home Loans, Rhys Dyer.
Interestingly, while the Eastern Cape accounted for only 6% of the total value of building plans passed in 2022, it has seen growth to the value of +218% since 2010, making it one of only three regions registering growth of over 200% during this period. In contrast, the Free State registered the lowest increase (+12.5%) in the value of residential building plans passed in 2022 relative to 2010.
ooba Home Loans onboarded 137 new residential developments in 2022 with the majority located in the Western Cape (46) followed by KwaZulu-Natal (18) and Gauteng (16). This trend aligns closely to StatsSA finding that 79.7% of all building plans passed in 2022 were for homes in these three provinces.
“In 2010, they accounted for just 68.1% of all plans passed, suggesting that there has been a concentration of residential building activity in these three regions,” comments Dyer.
The Western Cape ranks highest with 19 250 building plans passed in 2022, responsible for 38.5% of the total number of plans passed nationally in the same year. “It is interesting to note that the number of building plans passed in the province declined sharply in 2019 and fell further during the pandemic, before rebounding sharply in 2021, a recovery we attribute to the ongoing semigration trend,” adds Dyer. “Sought-after areas along the Garden Route such as George, Overstrand, Mosselbay and Knysna account for 40% of all building plans passed in the region.”
Most plots sold along the Garden Route over the twelve months are in estates, offering buyers an abundance of space, lifestyle benefits and security that they would be hard-pressed to find in the major metros.
In Cape Town itself, there is a growing trend from Gauteng’s semigrants to purchase new builds in the Northern Suburbs. “25.7% of the value of building plans passed in Cape Town in 2022 were for this area, with property owners attracted to the Northern Suburb’s for its relative affordability and higher availability of vacant land for new residential developments.”
In contrast, Gauteng experienced robust growth pre-pandemic but has since been subject to a steady decline. With 14 702 building plans passed in 2022, the region has experienced an 18.2% drop in new building plans passed since 2010. Looking to other inland provinces, demand for new builds in Limpopo has grown exponentially, comprising 5.2% of all building plans passed nationally in 2022 and registering a 122.3% plus uptick in the number of new building plans passed since 2010, the highest of any province.