Property market remains stagnant in Limpopo

Date: 19 October 2024 By: Anton van Zyl

If there is a property boom in South Africa, it’s definitely not in Louis Trichardt, where sales have been fairly stagnant over the past couple of years. Most of the activity in this market is in the mid-value property segment, with very little demand for luxury houses.

These are some of the findings from the latest report published by Lightstone Property, a company specialising in providing comprehensive data, analytics, and systems on property transactions. Lightstone Property compiled a separate report focusing on property transactions in Limpopo, which makes for interesting reading.

The current “stock” available in Limpopo totals R161.75 billion. Stock refers to the current registered properties and their values. The majority of properties are in the “mid-level” and “affordable” areas. Only 6% of the properties are registered in what is described as luxury areas.

As far as property sales are concerned, these have dropped dramatically since 2019, across all sectors. In 2019, just over 3,000 properties were sold in the R0-250,000 segment of the market, which was by far the most active segment. This has dropped to only 1,809 transactions in the same segment last year, and just 611 transactions in 2024.

What is interesting is that, even though sales volumes have dropped, the average purchase price has gone up. In 2023, the average purchase price was R832,116 (5,623 transactions), and this year it stands at R949,647 (2,785 transactions). The increase, especially in 2024, can be partly attributed to lower volumes of registered transactions due to delays at the Deeds Office.

The graphs provided by Lightstone Property indicate that the most active quarter for property transactions is the second quarter. Last year, the value of property transactions in Limpopo during this quarter was R1.26 billion. This year, Quarter 2 sales totalled R1.24 billion.

The most active town or city in Limpopo is Polokwane, with 4,041 transactions since 2022, at an average price of R1.09 million. The town with the highest average price is Hoedspruit, where 365 properties were sold at an average price of R2.34 million since 2022. In Louis Trichardt, over the same period, 557 transactions were registered at an average price of R819,003.

A breakdown of the types of properties sold shows the significant discrepancy between areas such as Hoedspruit and Louis Trichardt. In Hoedspruit, roughly 76% of the transactions were for luxury properties, whereas in Louis Trichardt this segment only represented 2.75%. Most of the transactions in Louis Trichardt were in the mid-value and high-value segments.

The fact that sellers are sometimes forced to sell their properties at prices below what they originally paid is also reflected in the graphs. In Louis Trichardt, 9% of the transactions fell into this category, known as “negative sales.” In Limpopo, the worst performer is Bela-Bela, where 13% of the transactions reflected negative sales. In Modimolle, the percentage is 10%.

In Limpopo, a property remains on the market for an average of 96 days. This is in line with Gauteng (also 96 days) but not as favourable as in the Western Cape, where the average time on the market for a property is 78 days. In 2014, the average for Limpopo was 88 days, and in Gauteng, it was 59 days.

In Louis Trichardt, a property, on average, stays on the market for 88 days (2024 figures). The worst performer in Limpopo is Bela-Bela, where it takes an average of 120 days for a property to sell.

Another interesting graph reflects the age groups of the buyers and sellers. As far as buyers are concerned, the 35-year-olds top the list (3.6%). The percentage of buyers between the ages of 30 and 39 is 32.4%.

Regarding sellers, the most likely age is 47 years (2.8%). Sellers seem to peak between the ages of 47 and 53.

Finally, Limpopo appears to have slightly more property sellers than buyers. The province with the biggest influx of buyers is the Western Cape. The data shows that 13% of those who sold property relocated to the Western Cape, while only 6% moved out of that province. In Limpopo, the losses and gains are fairly even, with 15% relocating here and 16% moving away. In Gauteng, 27% of the buyers come from other provinces, while 33% sell to move to other provinces.

Hayley Ivins-Downes, managing executive of real estate at Lightstone, said South Africa’s property landscape had changed significantly in the past two decades. The housing boom occurred between 2000 and 2006, with house prices rising by an average of 20% per year. Since 2009, however, the situation has changed dramatically.

She noted that new trends have emerged, including falling sales volumes, even as nominal values have increased. “Returns on investment have been disappointing when Lightstone’s current values are adjusted for inflation,” she added. New buyers, especially younger ones, have also not entered the market as expected.

Ivins-Downes said the demand had increased for estate and sectional title properties. “Semigration” has become an important trend, with the Western Cape the preferred choice for those moving from inland cities.

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Anton van Zyl

Anton van Zyl has been with the Zoutpansberger and Limpopo Mirror since 1990. He graduated from the Rand Afrikaans University (now University of Johannesburg) and obtained a BA Communications degree. He is a founder member of the Association of Independent Publishers.