Going Somewhere slowly
Category Market News
South Africa's property and automotive markets have drifted sideways and downwards over the past decade, reflecting the generally difficult economic times and more recently Covid-19 and its consequences - but amid the gloom there are clear signs of opportunity and growth that a changing country offers.
While the prices of both properties and vehicles have risen year-on-year, the volumes have not: property sales have been flat at around 220 000 while in 2011, 340 000 new vehicles were sold through the dealer network, and this dropped to 306 000 in 2019 - a decline of around 10%.
This performance comes against a backdrop of our currency halving in value (from R7:$1 to R14:$1), the CPI index rising by 67% and our population increasing by 15% from 50 million to 60 million people (14.5 million to 17.5 million households, or from 30 million to 38 million adults over the age of 20).
Average property purchase prices have moved upwards from R830k in 2011 to R1.1m over the last 12 months, while the average new vehicle price has moved from R290k to R440k.
Viewing the total value of new car sales and of property sales over the last year, South Africans now collectively spend R2.20 on a property for every R1 spent on buying a new vehicle. Though this is a low ratio (as one would expect the spend on properties to be much higher than on cars) it is an improvement on 2011 where only R1.65 was spent on a property for every R1 spend on a new car.
When including purchases by new home owners and sales by those leaving the property market, one out of two properties changed hands over the last 10 years.
Retirement complexes, student accommodation and lower cost residential developments grew in number over the past decade.
The data covered in this review excludes RDP, subsidised properties and the informal housing market. Lightstone has previously reported that a significant majority of people (89% nationally) live in low-income areas where household income is below R22k a month.
This housing challenge - a result of SA's past, rapid urbanisation and a struggling economy - presents significant opportunities for developers, the construction industry and suppliers of home products, in the years ahead.
Author: Lightstone
