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According to data released by Statistics South Africa (Stats SA) yesterday, South Africa’s residential property prices increased by 7.7% year on year in February. This was the largest lift since 2021.

But according to the statistical agency, the growth remained very unequal, with Cape Town prices increasing by 11.4%, followed by Buffalo City at 10%, Tshwane at 5.1%, Ekurhuleni at 4.8%, Johannesburg at just 4.0%, eThekwini at 3.5%, and Nelson Mandela Bay at 3.3%. Inflation for February was 3.0%.

Across the provinces, the Western Cape saw price growth of 11.3%, with Limpopo the only province that saw higher price growth, at 12.5%. Average property inflation in other provinces was 9.4% in the Northern Cape; 7.1% in North West; 5.2% in the Eastern Cape; 4.5% in Gauteng; 4.4% in Mpumalanga; 3.6% in KwaZulu-Natal; and 2.7% in the Free State.

The significance of the 7.7% lift in prices is best understood in the context of the long-term trendlines for South Africa’s residential property prices. Those follow on the chart below and show something quite amazing.

The chart shows the nominal and real prices for residential property in the country since 1994. Nominal prices are the actual rand price, and real prices are the rand price adjusted for inflation. Until around 2008, the chart shows that the two prices kept pace with each other. However, after 2008, as the economy began to sink, the two lines detached. While the nominal price continued to lift, the real price fell, meaning that homeowners were losing money on their investments.

The reason for this is that after the democratic transition, the market entered a powerful structural boom. From the late 1990s to 2007, house prices surged as more South Africans entered the middle class, banks expanded access to home loans, and the economy grew more strongly.

That boom ended after the global financial crisis in 2008. Since then, the national market has continued to rise in nominal terms, but in many parts of the country those gains have been eaten away by inflation. In real terms, the average South African homeowner has not experienced the same wealth effect that the headline price numbers suggest.

That post-2008 split also took on a regional dynamic.

The Western Cape emerged to become the clear outperformer in the national property market. Stronger municipal performance, lifestyle demand, economic resilience, and continued semigration from inland provinces have all helped drive prices higher.

That split is best understood at a metro level.

Stats SA's residential property price index shows that since 2010, once adjusted for inflation, prices across all South Africa's metros have fallen by about 2.5%. But Cape Town has far outperformed that average, with residential property prices up about 30.1% in real terms over the same period.

Ekurhuleni recorded a real decline of about 15.3%, while Tshwane fell by about 10.5%. eThekwini, which includes Durban, dropped by about 18.3%. Johannesburg was the weakest of the major metros, with a real decline of about 21.1%.

The chart below sets out these data:

This means that two people who bought homes in different cities in 2010 have had very different financial outcomes. A Cape Town homeowner has seen a real gain of about a third. A Johannesburg homeowner has watched about a fifth of their home's real value erode, with infrastructure pressures, weaker municipal performance, and slower demand weighing on values.

The result is a property market that increasingly reflects South Africa’s broader economic divide. Areas with better services, stronger local governance, reliable infrastructure, and lifestyle appeal are attracting capital and buyers. Areas with weak local government and deteriorating infrastructure are struggling to protect property wealth.

Could that change?

Economist Bheki Mahlobo told The Common Sense that if the Democratic Alliance (DA) and its mayoral candidate Helen Zille win Johannesburg and then retain control of the city, much of the real gap in property valuations between it and Cape Town should start to be eroded, making Johannesburg one of the most interesting property investment options facing South Africans.

The latest data however, show that Zille is still about ten points short of securing a win in the city. But with four months of campaigning to go, and a shambolic African National Congress government in Johannesburg, the race is far from over and shrewd investors will be watching the poll data closely as a lead indicator informing their property bets.

The Common Sense will be releasing new polling in the next few weeks, including data from Johannesburg, which will give some insights into how Zille and the DA are likely to perform in the city in November.