Formerly an office and now a trendy apartment at Rand President. (Supplied)
- Some experts expected the SA property prices to crash by up to 15% last year.
- Instead, new Lightstone data showed that house prices rose by more than 3% – stronger growth than in 2019.
- Mid-priced properties (R250,000 to R700,000) performed best.
- For more articles, go to www.BusinessInsider.co.za.
Amid expectations that property would crash during the pandemic, South African house prices surprised by rising by 3.05% last year, according to the property and vehicle research group Lightstone.
This was in line with inflation, and stronger than house-price growth of below 2% in 2019.
As the fallout from the pandemic and lockdown continues to hurt the local economy, a similar impact was expected on the residential property market, with experts predicting that house prices could fall by between 5% and almost 15% this year.
South Africa is not unusual, however – across the world, property prices have been surprisingly buoyant. Record low interest rates, and the urgent need to upgrade to a bigger property after being stuck within the same four walls during lockdown, have contributed to this trend.
The lowest interest rates in 50 years in South Africa, lower prices in some (mainly affluent) suburbs and lower transfer duties have contributed to stronger property prices.
Lightstone reported that the mid-value segment (properties priced at R250,000 to R700,000) fared best, gaining 4.9% in 2020. In 2019, these property prices only grew by 3.6%.
The low-priced category (below R250,000), high (R700,000 to R1.5 million) and luxury (above R1.5 million) properties grew 2.5% last year.
By comparison, the luxury segment that has been trending closer to -0.5% at the end of 2019.
But low value houses have seen their price growth fall from 10.2% in 2019 to 2.5%.
Property price growth across different price categories. Source: Lightstone
“A possible reason could be because the luxury segment is far more dependent on interest rate, which have decreased significantly, while the low value segment is more dependent on economic growth which has decreased significantly,” Lightstone said in a report.
Mpumalanga has seen the strongest property price growth (+5.7%) in 2020, while Gauteng saw the weakest growth:
Property price growth in 2020 in different provinces. Source: Lightstone