Provincial Moves: One in Four Sellers Buy in a New Province
Category News
In the dynamic South African real estate market, there has been a significant shift in the behaviour of homeowners who sell and buy property. Recent data from August 2024 reveals that 27% of homeowners who sell their homes now choose to purchase a new home in a different province. This represents a notable increase from 16% in 2019, signalling a growing trend toward interprovincial relocation. This trend provides key insights into shifting economic and lifestyle patterns, especially in the country's most active property markets.
Understanding the Sell-to-Buy Market
The sell-to-buy market, which consists of homeowners who sell their property and then purchase a new one, has become an essential segment for understanding the real estate landscape. In 2023, approximately 50,000 homeowners were part of this market, excluding segments such as first-time buyers, properties with multiple owners, sellers who don't buy another home, and households purchasing under different spousal names.
Among the provinces, Gauteng and the Western Cape dominate the market. Gauteng accounted for 48% of all transactions in this segment, while the Western Cape followed with 23%. Together, these two provinces contributed to just over 70% of the total sell-to-buy transactions in the country, highlighting their central role in the market.
The Growing Trend of Interprovincial Relocation
The shift towards interprovincial relocation is one of the most significant changes in the property market in recent years. With 27% of homeowners now opting to buy homes in different provinces, up from 16% in 2019, it suggests an increasing mobility of South African homeowners. Economic opportunities, lifestyle preferences, and regional differences in property prices are likely driving factors behind this trend.
However, despite this rise, the majority of homeowners still prefer to stay within their province. Even though the percentage of those staying put has dropped in eight out of nine provinces between 2018/19 and 2023/24, the figures remain high. The Western Cape stands out as the only province where the proportion of repeat buyers staying within the province has remained relatively steady, at 87% (down from 89%).
By contrast, other provinces have seen more significant declines in retention rates. For instance, Gauteng experienced a 10% decrease in repeat buyers staying in the province, while KwaZulu-Natal and Mpumalanga saw a 13% drop, and Limpopo saw a 15% decrease. The trend highlights a growing inclination among South Africans to explore opportunities in other parts of the country, particularly the Western Cape.
The Western Cape: A Hotspot for Property Investment
The Western Cape has emerged as a key destination for both local semi grants and high-value property transactions. The province consistently outperforms others in the sell-to-buy market when it comes to property value. More than 65% of transactions in the R2m-R3m price range occur in the Western Cape, and the figures only grow as property values increase. The province boasts over 70% of transactions in the R3m-R4m and R4m-R5m price bands, and an impressive 85% of properties valued above R5m.
This high concentration of valuable property transactions suggests that the Western Cape continues to be a preferred destination for affluent buyers, with 70% of those moving into the province purchasing homes in the higher-value segment. Semi grants from Gauteng, in particular, are contributing to this trend, with 3,500 homeowners moving to the Western Cape from Gauteng, and 870 arriving from KwaZulu-Natal.
Provincial Gains and Losses: Towns in Focus
When examining the movement of homeowners at a more granular level-by looking at towns and cities rather than provinces-the pattern becomes even clearer. Ten towns in the Western Cape lead the way in attracting semi grants from other provinces, showcasing the province's appeal not just in metropolitan areas but across its smaller towns and cities.
On the other hand, Gauteng has seen significant outflows. Eleven of the 15 towns with the most homeowners leaving are located in Gauteng. When it comes to net gains and losses, the trend is even more pronounced: 14 out of the 15 towns with the highest net gains are in the Western Cape, while Gauteng dominates the list of towns with net losses. The Eastern Cape's Jeffrey's Bay is the only town outside of the Western Cape to feature on the net gain list, though by a small margin.
Age, Mobility, and Provincial Preferences
Age also plays a crucial role in the interprovincial movement of homeowners. Younger sell-to-buy homeowners are more likely to stay in Gauteng, with 80% choosing to remain within the province. In contrast, older homeowners, particularly those nearing retirement, are more likely to leave. Among this older demographic, 60% remain in Gauteng, while the Western Cape is the favoured destination for those leaving.
This pattern of older homeowners leaving for lifestyle-driven moves to the Western Cape is not unique to Gauteng; it can be observed across other provinces as well. In contrast, very few homeowners leave the Western Cape, solidifying its position as a desirable province for both staying residents and incoming buyers.
Conclusion
The shift toward interprovincial relocation, particularly to the Western Cape, reflects broader socio-economic trends in South Africa's real estate market. As more homeowners seek better opportunities, quality of life, or lifestyle changes, market resilience remains a defining feature of the country's property market. The rising property prices in key regions like the Western Cape further illustrate the growing demand for high-value real estate, cementing its status as a prime location for those seeking to invest in property.
Author: Huizemark Sandton