Financial Planning & Wealth Management

To Sell a House

I’m still trying to sell my apartment in Johannesburg. I have a good tenant, but that’s about all. I’ve put it on the market, taken it off, put it on again. It’s tough out there.

 

The latest Lightstone analysis on how long it takes to sell a house in South Africa over the last 10 years confirms that selling a house in South Africa just takes longer these days. In 2015, the average property was listed for 69 days, but in 2024, that has risen to 92 days—just over three months on the market.

 

Have a look at that upward trend –

Source: Lightstone

 

Their report did the same analysis across the big five metros. Sellers in the City of Johannesburg need nearly twice the patience they had in 2014, when it took around 57 days to sell a house. By 2024, the average increased to around 103 days.

The City of Cape Town has increased somewhat, but not nearly as much as the rest of the country. In 2014 it took about 55 days, and today, it takes just under 80 days.

 

It’s not surprising that it’s taking longer and longer to sell a house in Johannesburg. I’d expect there to be a clear correlation between the number of days taken and home price appreciation.

 

The graphic below shows this year’s residential property appreciation by province.

 

Graphic: Provincial property inflation

Source: Lightstone

 

The Western Cape is still leading with the highest home price appreciation at 4.3%, but this is still below inflation, which means home prices this year in the Western Cape are still negative in real terms. In contrast, Gauteng has the lowest rate (I would have thought this would have gone to KZN, but to be fair, both are pretty dismal at below 1%).

 

You’d think that property in general in South Africa has been a terrible investment. It hasn’t always been like this.

 

Have a look at the chart below on the long-term performance of our property sector (that red line) against our resources and financials. Up until 2018, property was the place to be.

 

Graph: South Africa Sector Performance from 2005

I know a host of people who were sitting in Growthpoint, taking in those dividends and getting capital appreciation. And just like that, their portfolio dropped by more than half. It fell off a cliff.  Just goes to show the trouble with concentrated portfolios.

 

And you’d think, based on the above data, that we wouldn’t want to go near property as an asset class in South Africa.

 

But just this year, the property index is already up 22.5% (!). Only our financial sector has trumped it, having generated over 30% in returns just this year.

 

Graph: South Africa Sector Performance for 2024.

It may seem obvious that after such a long period of poor returns, they were bound to bounce back. But it’s not actually that obvious, and there’s no reason to think this trend will continue. Property is notorious for being long term and cyclical, just like the resources sector. The drivers are slightly different, but the cyclical aspect is the same.

 

Have one more look at that last chart – the general equity sector in the JSE is up 9.5% for the year already. That number is pretty much the weighted average of all sectors. That’s a decent performance. And if you had a good allocation to offshore markets, you’d be up even more.

 

While its fun to look at individual stocks and sectors, the reality is that it’s incredibly difficult to time the market. Rather than focusing on the markets, you should focus on your goals. This is what you can control.

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About

 MattFin is a blog that focuses on wealth management, investments, financial markets and investor psychology. I build financial plans and portfolios for families and individuals

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