15 Years of Property Insights

South Africa's property landscape has witnessed significant changes over the past 15 years, marked by urbanization, migration, and shifting property investment trends. Lightstone Property, a leading provider of property data and analytics, recently released a report that reflects these transformations, offering key insights into where the property market is headed. This article breaks down the essential trends, focusing on population shifts, property registrations, and the evolving investment landscape.

Urbanization and Population Shifts

Urbanization has been a defining feature of South Africa's demographic landscape over the past decade. According to Lightstone's analysis, the population grew from just under 54 million in 2013 to nearly 62 million in 2023. This growth is most notable in urban areas, where the population increased by 15.3%, reaching 39 million by 2023. However, a significant shift is also happening in areas adjacent to urban centres.

These peripheral areas have seen a 46.2% jump in population, with the number of people living in such regions rising from 2.4 million to 3.5 million between 2013 and 2023. This trend reflects a growing preference for semi-urban living, where individuals and families can benefit from proximity to cities while enjoying the relative affordability and lifestyle appeal of the outskirts.

Interestingly, the Western Cape leads the way in urban population growth, with a 22% increase over the ten-year period. Meanwhile, areas around Gauteng and Limpopo have experienced the highest growth rates in adjacent urban centres, doubling their populations over the same period. This shift reflects broader national trends, where people are increasingly leaving rural areas for more accessible housing opportunities closer to economic hubs.

Cape Town Leads New Property Registrations

When it comes to new property registrations, Cape Town has been at the forefront. Since 2019, over 57,250 new properties have been registered in the city, making it the leader in property growth. However, Gauteng remains a powerhouse in the property market, with Johannesburg, Ekurhuleni, Tshwane, and the smaller municipality of Lesedi all featuring prominently in terms of new registrations.

Lesedi, located southeast of Johannesburg, has shown remarkable growth, largely driven by collaboration between local authorities and the Gauteng Department of Human Settlements. More than 11,000 houses have been delivered, and nearly 1,000 informal stands have been formalized. This growth mirrors the strong migration into the region as people seek more affordable housing options near Johannesburg.

Smaller towns have also seen significant property registration activity. Municipalities such as uMshwati in KwaZulu-Natal and Umzimvubu in the Eastern Cape recorded property stock increases of 57% and 55%, respectively, since 2019. Drakenstein in the Western Cape, with Paarl as its municipal seat, saw a 13% rise in stock, with the average value of new properties reaching an impressive R2.1 million.

In fact, the Western Cape consistently leads in high-value property registrations. Nine of the top 20 towns with property values over R3 million are in this province, which is indicative of the increasing demand for properties in semigration destinations like Paarl and Stellenbosch. Gauteng and KwaZulu-Natal also feature prominently, reflecting the diverse geographic spread of the country's property market.

Residential Property Investment Trends

The South African property market has also seen evolving trends in residential property investment. Lightstone's data highlights that the appetite for residential investment has declined since 2022, following consistent year-on-year growth in investor activity from 2006 until 2021. Investor volumes have flattened out, with a slight decline in 2023 and 2024. However, it's too early to call this a long-term trend, and the market could shift as macroeconomic conditions change.

Most investor activity is concentrated in properties valued between R750,000 and R1.5 million. Surprisingly, 46% of these investment properties are not bonded, reflecting investors' preference for cash purchases. Currently, about 7% of residential stock in metros and 4% in non-metros is held by private investors.

While the demand for estate properties has declined by 4%, there has been an increased interest in sectional title units within estates. These properties, offering a blend of affordability and security, are popular among investors. Sectional title properties located within traditional residential complexes also hold appeal, with 16% of such properties now owned by private investors.

The Rise of Semigration

One of the most notable trends over the past decade has been the rise of semigration, where South Africans relocate from inland provinces like Gauteng to coastal areas, particularly the Western Cape. This trend has contributed to the rapid rise in property values in Cape Town and surrounding towns, where investors are increasingly cashing in on their investments due to rising prices.

Cape Town, however, has seen a flattening in investor activity. In contrast, cities like Johannesburg, Pretoria, and Durban have recorded small growth in investment volumes, with a 2% and 1% rise, respectively. This could be due to stock shortages in Cape Town, pushing house prices up and prompting investors to sell off their holdings for higher returns.

Conclusion: A Changing Landscape

South Africa's property landscape has undergone profound changes over the past 15 years. Urbanization continues to shape the market, while smaller towns and peripheral areas are seeing increased housing activity. Meanwhile, investor trends have shifted, with interest growing in sectional title units and semigration reshaping demand in coastal areas. As Lightstone's data reveals, the country's property market remains dynamic, reflecting broader economic and social shifts.

While challenges remain, including affordability and stock shortages, these trends offer valuable insights for investors, homeowners, and policymakers looking to navigate the future of South Africa's property market.