18 November 2022
Stats SA’s private sector building report for September 2022 shows a boom in demand for residential building developments in the western Cape while demand in Gauteng is declining – highlighting the semigration trend of South Africans moving from busy industrial cities to quieter coastal towns.
The new data from Stats SA shows that building plans passed for residential developments in the Western Cape have increased by 22.2% year-on-year to a value of R15.4 billion in 2022 – while plans completed over the same period in the Western Cape increased by 21.6% to the value of R9.2 billion.
Additionally, there has been a noticeable increase in demand for residential developments in Kwa-Zulu Natal, showing a year-on-year increase of 15.6% in plans passed and a significant increase of 67.9% in plans completed over the same period to the value of R7.7 billion and R4.1 billion, respectively.
In contrast, Stats SA shows that building plans passed for residential developments in Gauteng have decreased by 13.5% year-on-year, from a value of R16.2 billion in 2021 to R14.1 billion in 2022. Plans completed in the province have also declined by 6.1% from a value of R9.4 billion in 2021 to R8.8 billion in 2022.
The report also showed a decline for residential developments in the Northern Cape and North West, which showed a decline of 11.6% and 6.7%, respectively, in building plans passed over the same period.
Despite the lack of demand in some provinces in the country, the market for residential developments in South Africa is buoyant, showing a year-on-year increase of 4.4% in building plans passed to a value of R46.6 billion in 2022, while completed projects have increased by 14.4% to a value of R25.9 billion.
The outcomes of Stats SA’s report could be attributed to the noticeable trend of South Africans semigrating to South Africa’s coastal towns.
Throughout 2022, several property agencies have signalled the spike in demand for homes along the South African coastline.
Pam Golding said that the first wave of semigration to the Western Cape is evident from late 2013 to late 2016 and again since 2020 – in the wake of the pandemic, the unrest during 2021, and the growing concern around the ability of municipalities to deliver services.
“Looking back over the past decade, Gauteng province has accounted for between 40 – 45% of total unit sales in South Africa. In late 2019, sales peaked at around 45%, but by late 2021 this had dropped to close to 40%,” said Dr Andrew Golding, chief executive of the Pam Golding Property group.
“The Western Cape was the primary beneficiary of the post-hard lockdown shifts in buying patterns, with its share of home sales rising from a low of almost 21% in mid-2020 to almost 27% by late 2021,” he added.
Additionally, Lightstone data shows that price growth for 2021 was higher in the coastal areas compared to the rest of the country, with an increase of 6.1% on the coast compared to 4.9% in the inland regions.
Realty experts at Chas Everitt International noted that despite the trend of semigrating to South Africa’s coastal towns, movement between Gauteng and the Western Cape is no longer a one-way street.
The group said it is seeing a significant increase in home sales in the most sought-after northern suburbs of Johannesburg in the past few months as affluent buyers moving from other parts of the country add to local demand.
According to Rory O’Hagan, principal of Chas Everitt International in Sandton & Hyde Park, the sales surge has happened despite large-scale disenchantment with the city council and the management of Johannesburg.
This was evident after the first year of Covid-19 when many of the city’s affluent businesses and homeowners realised how easily they could work remotely and started removing themselves to upmarket rural enclaves and luxury lifestyle estates in the Western Cape, Eastern Cape and KZN.
While this trend of reverse semigration may be evident, it is not reflected in private-sector building plans.