At best house prices in South Africa could increase, on average, by 2.3% in the year ahead, while a more pessimistic scenario could see house prices decline by 1.3%, according to analytics company Lightstone.
Its data shows that house price inflation has steadily declined by about 1.5% a year since 2018, "making a low-end prediction below 0% a strong reality". In 2019 house price growth had a "mediocre" performance at best, according to Lightstone.
Its research found that, provincially, property price growth continues to decline in the Western Cape (3.9%) after maintaining a growth rate of about 10% since late 2014. The Eastern Cape property prices continue to increase, while property price growth in Gauteng and Kwazulu-Natal remains subdued.
"The pressure is on for policy makers to urgently implement growth-inducing policies and remove uncertainty from the political sphere," notes a Lightstone report on house prices.
According to Paul-Roux de Kock, Lightstone's analytics director, house price growth in the affordable segment of the market, however, continues to perform better than the market in general.
Most of the growth in the affordable market (properties of between R300 000 and R600 000) occurs in its low-end band, in part driven by "a very active informal economy" and downscaling by those in the higher price segments.
Another trend, according to De Kock, is that gated estate developments have gained popularity over the years, mostly due to growing safety and security concerns in the country as well as the various lifestyle features offered by estate living.
However, the outlook for price growth in the estate market - as for the rest of the property market - suggests declining growth, he says.
As for the luxury and high-value (R1.2 million and more) segments of the SA residential property market, these are entering into nominal house price decline for the first time since recovering from the 2008/2009 recession, Lightstone data indicates.
"The lack of strong economic growth in SA eventually meant that even average Western Cape property price growth dropped back closer to the national average," De Kock said at a recent Lightstone information session in Cape Town.
Lightstone research has found that spatial segmentation in the country's metros impacts significantly on housing affordability. In its view, market-segmentation spatial analysis can, therefore, assist municipalities in human settlements and transport planning in order to improve integration and housing affordability.
The Lightstone research also shows that the contribution of government housing programmes at the lower end of the market is significant. An estimated 67% of residential properties under R300 000 are government subsidised.
Government subsidised housing, when it appreciates, in turn offers value to existing owners and a chance to climb the housing ladder, while offering affordable housing to aspiring buyers.
Yet, on the whole, resale transactions of houses at the lower end of the market have been declining, the data shows. There is limited and declining availability of new, affordable houses at the lowers end of the market - except for the government subsidised housing. This is due to declining access to credit for lower income earners, because lending by banks for home loans for low-value properties is declining significantly, according to Lightstone.