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Understanding the 5. 2 percent rise in South Africa's residential property price inflation for January 2025
Stats SA reports a modest increase in residential property price inflation across Mzansi.
Image: Simphiwe Mbokazi
The annual national residential property price inflation was 5.2% in January 2025, an increase from a revised 5.1% in December 2024.
This is according to the Residential Property Price Index January 2025, released by Statistics South Africa (StatsSA) on Thursday.
The data showed that the residential property price index (RPPI) increased by 0.4% month-on-month in January 2025.
'The main contributors to the 5.2% annual national inflation rate were Western Cape (8.7% and contributing 3.3 percentage points) and Gauteng (2.3% and contributing 0.9 of a percentage point).
The RPPI for all metropolitan areas increased by 5.0% between January last year and January this year. The main contributors to the 5.0% annual inflation rate for metropolitan areas were City of Cape Town (8.5% and contributing 3.1 percentage points) and City of Johannesburg (2.3% and contributing 0.5 of a percentage point).
The annual national residential property price inflation is generally a positive indicator for the local property market, says Dr Farai Nyika, an academic at the Management College of Southern Africa(MANCOSA). He said both property developers and existing homeowners depend on, and benefit from, sustained price inflation to realise returns on their long-term investments.
However, he said that one significant consequence of rising property values is that municipalities periodically revalue properties, which often results in higher property rates for owners.
'For prospective property investors, it is important to note that real returns are only achieved when property price inflation exceeds the annual consumer inflation rate, inclusive of all associated costs (such as rates, taxes, maintenance, and transaction fees). Rising property prices also stimulate demand in related industries, including hardware suppliers, cement producers, and manufacturers of construction materials. This, in turn, supports job retention and the creation of new employment opportunities, which is particularly important in the context of South Africa's challenging economic climate,' Nyika said.
The academic said that conversely, Cape Town is increasingly becoming unaffordable for many first-time buyers, placing them at risk of becoming perpetual renters. He said as people tend to 'vote with their feet', the city - despite being an attractive and desirable destination - continues to reinforce generational divisions along the lines of income and property affordability.
The RPPI for properties sold for the first time increased by 6.0% between January 2024 and January 2025. The index increased by 0.3% month-on-month in January 2025.
The RPPI for resold properties increased by 5.9% between January 2024 and January 2025. The index increased by 0.4% month-on-month in January 2025.
The RPPI for sectional title properties increased by 3.1% between January 2024 and January 2025. The index increased by 0.4% month-on-month in January 2025.
The RPPI for freehold properties increased by 7.1% between January 2024 and January 2025. The index increased by 0.5% month-on-month in January 2025.
In a property note released this week, FNB said that looking ahead, the recent series of interest rate cuts is expected to mildly strengthen market conditions in 2025 compared to 2024.
However, the bank said that a strong and sustained recovery will depend on achieving significantly improved economic growth. FNB added that it forecasts modest improvement, with growth rising from 0.5% in 2024 to 1.1% in 2025, and reaching 1.9% by 2027.
It said it also anticipates that interest rates will likely move sideways for a protracted period following one more expected 25-basis-point cuts in the second half of 2025. While this expected mild improvement in the economic and interest rate environment is welcome, FNB said it may not be sufficient to support sustained real (inflation-adjusted) growth in property income and capital values through the forecast period to 2027.
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