Property purchases in South Africa drop by 13% since 2018

Fewer young South Africans are buying houses than six years ago, according to property data from Lightstone research group

Residential property sales have declined across all age groups since 2018, with a sharper drop among young people, typically first-time homebuyers.

Total property purchases fell from 294,859 in 2018 to 255,726 in 2023, a 13% decrease. Purchases by the 26 to 35 age group dropped 25%, from 92,558 to 69,577, reducing their share from 31% to 27%.

The 25-or-younger age group has consistently represented 4% of purchases due to financial constraints, with sales falling from 11,480 in 2018 to 8,977 in 2023.

Despite lower sales volumes, Lightstone's data shows that buyers up to age 35 are spending more on homes. In 2018, 29% of buyers paid between R1 million and R3 million, increasing to 36% in 2023.

Those paying over R3 million rose from 2% to 4%, while houses priced between R250,000 and R500,000 fell from 34% to 25%.

Approximately 70% of buyers are first-time purchasers, with the remaining 30% being repeat buyers, a proportion that has remained stable over the years.

Rentals Continue to Thrive

Affordability is driving rental markets across the country, according to Seeff Property Group. High demand in affordable areas persists, although prolonged low economic growth limits rental yields.

The PayProp Rental Index for Q1 2024 shows rental growth slowing to an average of 3.8% this year, potentially declining further due to the weak economic climate.

Rochelle Holland of Seeff Johannesburg North West advises landlords to keep rental expectations reasonable, as overpriced properties remain vacant.

Tenants need to manage their spending and monitor debt payments, as negative payment behaviour disqualifies many.

The national average monthly rental increased slightly to R8,654 from R8,353 in Q1 2023. Gauteng's average rent is close to R9,000 per month, up by 3.5%, below the national average rental growth.

Rents in Gauteng metro areas are more affordable compared to the Cape, where the average rent is R10,300.

The latest TPN index shows over 70% of rentals nationally fall below R10,000 per month, with about 25% below R5,000 per month. Only 10% of tenants pay over R15,000 per month.

Holland noted that the most active rental price range in her area is between R8,000 and R10,000.

According to the 2022 Census, 36.6% of Gauteng's population lives in rented accommodation. Lifestyle and affordability drive rental demand in Johannesburg West, offering good value for money and maintaining the area's popularity with tenants.