Coastal property prices are rising faster than inland areas, while Gauteng housing market rebounds

Coastal property markets continue to perform better compared to inland areas, according to the Seeff Property Group.

Our sales data shows that prices paid in the coastal regions remain among the highest in the country, says Samuel Seeff, chairman of the Seeff Property Group.

Meanwhile inland property markets are also showing interesting trends. According to Dr. Andrew Golding, chief executive of the Pam Golding Property group: “Notably, with Western Cape house price inflation slowing markedly - at +2.9% in March 2024, growth in Gauteng prices continues to strengthen - currently at +2.5%, indicating that house price inflation in the two regions is rapidly converging.

“Furthermore, the rebound in coastal house prices continued in December 2023 (latest available data from lightstone), rising to +6.7%, while non-coastal HPI slowed, resulting in the coastal vs non-coastal price premium widening further, to +5%, a level last seen in mid-2005," says Dr. Golding. 

An enchanting home in Parkwood on the market for R3.6m

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Dr. Golding further explained that, after stabilising at +3.01% in Q4 2023, national house price inflation in South Africa has inched higher in Q1 2024, rising to +3.1% in March 2024, with anticipated lower interest rates later this year and stronger economic growth likely to boost both market activity and house price growth in late-2024, according to the latest Pam Golding Properties Residential Property Index.

Seeff goes onto share that the latest Lightstone House Price Index shows that prices are rising faster in coastal areas compared to elsewhere in the country. Prices in the Cape for example are still rising at 4.79% on average. Coastal areas also boast the lowest rental vacancies.

Charming Dutch style home in Mossel Bay on the market for R2.725m

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A Rode Property Report notes that only 2.3% of flats in the Western Cape were vacant in the first quarter this year. The average for Cape Town as 2.5%, and 0% for George. Comparatively, Gauteng vacancies rose to 9.3%.

Semigration remains a key contributor to the property market in coastal areas. Lightstone recently noted that the highest influx of new residents last year were to coastal towns in the Garden Route such as Mossel Bay, George, Knysna, Plettenberg Bay, as well as with Hermanus on the south coast, and Langebaan on the West Coast.

Mossel Bay has been a great property success story with some of the highest volume of semigration buyers. Kaaiman Schutte, licensee for Seeff Mossel Bay says the town offers a fantastic lifestyle, close proximity to George, and affordable property.

Although the market has slowed from the 2021/2 peak, transactions in 2023 were still well ahead of the pre-pandemic period despite the higher interest rate. The average price for freehold property is R1.9 million, sectional title is R1.4 million, and estates at R4 million.

Pieter Jordaan, licensee for Seeff George says families especially migrate here for a better quality lifestyle. Market transactions here were also still notably higher in 2023. Aside from families, older buyers also love the George area which is renowned for its golfing.

As the main city in the Garden Route, George offers an airport and city benefits including great schools, but little in the way of traffic and stress. Correctly priced property below R2.5 million still sells quite quickly, often within days of listing it. Estates are popular with some now priced upwards of R5 million. Popular alternatives include Blue Mountain Village, priced from R3 million, and Kraaibosch, from R4 million.

Low maintenance, safe & secure family home in George on the market for R2.799m 

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Surge in demand for investment properties

Positively, says Dr Golding, the surge in demand for investment or buy-to-rent properties continued in March 2024, lifting the Q1 2024 average to 12.5% of applications, compared to just 8.3% in Q1 2023. Notably, applications for buy-to-rent/investment properties are being led by the Western Cape.

“However, with household finances impacted by elevated interest rates, rising fuel prices and a sluggish economy, the demand from first-time buyers has dampened - except in Gauteng South and East and the Free State, where the continued relative affordability of homes ensures ongoing demand from this sector of the market.”

Notwithstanding this, points out dr. Golding, rather than reflecting a recovery in demand in the market, the Q1 2024 increase in the average price paid is largely attributable to more affluent buyers purchasing properties in high-demand areas, such as the Western Cape.

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Plettenberg Bay is another success story as high net worth buyers have flocked here over the last few years, and the town has achieved some of the highest prices in the country (outside of the Atlantic Seaboard). According to Alet Ollemans, licensee for Seeff Plettenberg Bay, there has been a notable uptick in prices paid above R10 million, mostly in Sea Side Longships and estates such as Brackenridge, Whale Rock Ridge, Whale Rock Beach, and Turtle Creek Golf Estate.

Beautiful Brackenridge home with magnificent valley views on the market for R6.9m

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She says its mostly older buyers, even those in their fifties who are streaming here for the quality lifestyle and excellent climate. Plett is also a popular tourist town and is packed and fully booked over the schools holidays and long weekends. The current freehold price is R3.7 million, and R2.6 million for sectional title.

Knysna property prices have also seen tremendous growth over the last few years:

The average freehold price rose by 75% from R2 million in 2021 to R3.5 million last year. The sectional title price is up by 30% from R1.15m to R1.5m.

A notable number of sales have been concluded above R5 million, mostly in the waterfront areas such as Thesen Island, Benton on Lake, Belvidere Estate, The Heads, Leisure Isle, as well as in the Simola and Pezula estates.

Alan Phillips, regional manager for Seeff Eastern Cape says Gqeberha is also seeing an influx of buyers, mainly those with roots in the city who are coming back to retire here. Despite steady price growth, affordability remains a major advantage for property buyers.

A coastal apartment in Summerstrand for example sells for around R1.5 million on average, although luxury units can go as high as R5 million. Sectional title property in Lorraine and Walmer is priced around R1 million on average, and houses at R1.7 million and R3 million, respectively.

Hermanus is arguably one of the most popular holiday towns for its proximity to Cape Town, whale watching and fabulous wineries. It has seen an influx of wealthy buyers and excellent price appreciation. Sectional title prices are up from R1.1 million five years ago to R1.85 million, and houses from R1.7 million to R2.5 million on average. The volume of transactions above R5 million climbed notably over the last few years. 

Langebaan, has seen an increase in permanent residents:

Despite the market slow-down, 2023 was another exceptional year with a notable volume of sales above R5 million, mostly in Myburgh Park and estates such as Calypso Beach, Longacres, Paradise Beach, and Langebaan Country Estate.

Jaco and Tracey-lee Coetzee, agents with Seeff Langebaan who concluded sales of up to R6.9 million, R8.25 million and R8.8 million in Calypso Beach say that most were to local buyers. The R6.9 million sale in Calypso Beach was, however, for a holiday home, bought by an SA Expat living in Canada.

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