Buying a property in Johannesburg: a complete guide

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Yes, the analysis of Johannesburg's property market is included in our pack

Considering buying a nice property in Johannesburg? You're not alone!

Many people are captivated by Johannesburg's urban energy and dream of owning a stylish city apartment or a comfortable suburban house there.

Is it financially viable, though? Are property prices increasing in Johannesburg? What is the price per sqm? Should you consider investing in Sandton or Maboneng? What about the taxes? Which place will give me the best yields?

We've figured it out for you.

At TheAfricanvestor, we've thoroughly explored this market. Actually, we have condensed all our findings in a pack. Get it now.

In this article, get ready to receive valuable insights from us.

How's the property market in Johannesburg?

Is the property market getting better or worse? People have different views. We like to be unique and analyze the latest data and stats to make accurate conclusions.

Types of properties

In Johannesburg, there are various types of properties available for sale, catering to different preferences and needs.

These include residential properties like houses, apartments, and townhouses, which offer comfortable living spaces for individuals and families.

Commercial properties such as offices, retail spaces, and industrial units are also on offer, providing opportunities for businesses and investors.

Additionally, vacant land and plots may be available for those interested in building their own custom properties.

Whether you're looking for a place to call home, a space for your business, or a piece of land to develop, Johannesburg offers a diverse range of property options for sale.

Should you buy or rent?

(If you're buying for yourself and not to rent out)

If you live or intend to live in Johannesburg, you probably wonder whether it's better to buy or rent.

Without a doubt, you should buy if you want to acquire equity and have long-term stability in Johannesburg.

One data can help you make a decision - the property price-to-rent ratio. It's a way to understand how many years of rental income you need to cover the property's current price.

According to Numbeo, the property price-to-rent ratio in Johannesburg is around 8.86, which is one of the lowest in the world.

It means that, on average, you would only need 9 years of rental payments to actually purchase a property. You plan on staying that long? Go for buying.

Housing prices in Johannesburg

On average, according to the last data from South African Reserve Bank (SARB), purchasing a property in Johannesburg would cost you around $775 per square meter.

Naturally, things are quite spread out. A house in Sandton might have a different price per square meter than a suburban property in Bryanston. We actually give you a more detailed breakdown in our pack for buying property in Johannesburg and in South Africa.

To put things in perspective, it is 25 times less (yes, you read it correctly) than the property prices in the center of New York.

Also, housing prices in Johannesburg are 61% cheaper than in Cape Town.

The most expensive neighbourhoods in Johannesburg are probably Sandton and Hyde Park, while the cheapest are probably Soweto and Alexandra.

Trends

First and foremost, we have to acknowledge that South Africa is, nowadays, a relatively stable country. The last Fragile State Index that has been reported for this place is 72.

It is something to have in mind when wondering whether it's a good investment to buy a property in Johannesburg.

Also, according to the IMF’s forecasts, South Africa's economy is expected to soar by 6% in the coming 5 years, resulting in an average GDP growth rate of 1.2%.

If you want to invest in real estate in Johannesburg it's a good thing because, usually, when the economy grows, people make more money, and this encourages them to invest in real estate, which drives up the demand and prices for properties.

Also, in South Africa, the average GDP per capita has changed by -3.7% over the last 5 years. It is a concerning and unsettling statistic.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in South Africa right now.

Buying property in Johannesburg

Buying real estate in Johannesburg can be challenging due to the difficulty of obtaining reliable and up-to-date information. That's why we have created the pack to buy property in Johannesburg and in South Africa.

Buying process

Within our pack, we have outlined the complete buying process. This includes the necessary documents, the applicable taxes, as well as information about where to locate properties, and more.

Here, we are providing you with a simpler version to assist you in better comprehending the information.

This is the step-by-step process to purchase a property in Johannesburg:

1. Define your budget and requirements, considering Johannesburg's property market dynamics.
2. Engage a qualified real estate agent familiar with Johannesburg's neighborhoods.
3. Search for suitable properties in Johannesburg, considering factors like proximity to amenities and safety.
4. Arrange property viewings, ensuring you're present for a physical inspection.
5. Conduct a thorough property inspection, checking for any unique challenges such as subsidence risks.
6. Verify the property's legal status and ownership by examining the Title Deed, approved building plans, and compliance certificates.
7. Obtain financing pre-approval from a South African bank, adhering to their specific requirements.
8. Make an offer to purchase, utilizing the correct Offer to Purchase document common in Johannesburg's property transactions.
9. Negotiate terms and finalize the sale agreement, considering any Johannesburg-specific clauses or disclosures.
10. Pay the deposit and sign the sales agreement, ensuring adherence to South African property laws.
11. Complete property transfer and registration, including transfer duty and registration fees.
12. Take possession of the property, settling outstanding payments, and obtain the official Deed of Transfer and updated Title Deed, finalizing the process.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in South Africa.

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Where to find a property

Explore these websites to find properties in Johannesburg:

• Private Property - A comprehensive South African real estate website for buying, renting, selling, and property advice services.
• My Property - A transparent property portal for buying, selling, and renting homes with valuable insights.
• Property24 - South Africa's largest property search portal, offering houses, flats, land, and farms for sale or rent.
• RentUncle - A user-friendly platform offering a wide range of rental and sale listings, featuring map search, search alerts, and rent comparison tools.
• RE/MAX - The largest real estate company in Southern Africa, providing services for buying, selling, renting, and property valuation.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in South Africa.

What you can get

As mentioned before, the average price per sqm in Johannesburg is $775. A 1-bedroom property with 60 square meters of space would cost approximately $47,000, and a 2-bedroom with 85 square meters of space would be around $66,000.

Obviously, property prices will change based on both the property itself and its location.

Typically, prices are higher in the top areas of Johannesburg. A condo in Sandhurst could cost around $90,000, and a villa in Hyde Park might be priced at $170,000.

However, some places are cheaper. You can discover a home in Soweto for $80,000 or a home in Alexandra for just $50,000.

We give a more detailed breakdown in our full pack for buying property in South Africa.

Risks and pitfalls

Here are the main pitfalls specific to buying a property in Johannesburg, South Africa:

• Land restitution claims: Properties with unresolved land restitution claims may face legal complications.
• Eskom power outages: Frequent electricity blackouts can disrupt daily life and property functionality.
• Mining subsidence: Certain areas are prone to ground subsidence due to mining activities, affecting property stability.
• Wildlife encroachments: Some properties may encounter issues with wildlife intrusions, especially near nature reserves.
• High-voltage power lines: Properties near these lines may experience health concerns and reduced resale value.
• Water scarcity: Water restrictions may impact daily living and property gardening potential.
• Sectional title complexities: Be aware of shared property rules and potential disputes in sectional title developments.
• Informal settlements: Nearby informal settlements can impact security and may lead to property invasion risks.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our South Africa Property Pack

Living in Johannesburg

Living in Johannesburg is a vibrant experience, offering a unique mix of culture, entertainment, and opportunity, making it an ideal choice for those looking to buy property.

Cost of living

The cost of living in Johannesburg is generally quite affordable. Prices for goods and services are usually lower than in other major cities in South Africa.

Here are some examples to better understand the cost of living in Johannesburg, South Africa:

• Rent for a one-bedroom apartment in the trendy neighborhood of Maboneng: $800 per month.
• A meal at a local restaurant with "Pap and Chakalaka": $10.
• Monthly Gautrain card for efficient city transportation: $50.
• Utilities (electricity, water) for a small apartment in Sandton: $70 per month.
• A bottle of South African Pinotage wine from the Stellenbosch region: $15.
• Entrance fee to the Gold Reef City theme park: $20.
• Monthly membership at a popular gym chain like Planet Fitness: $45.
• A cup of "Rooibos Latte" at a coffee shop in Melville: $3.

Neighbourhoods

Since we aim to provide information clearly and in a way that's easy to understand, we've created a summary table outlining the different neighborhoods in Johannesburg. For yields, prices and rents, check our property pack.

Life in Johannesburg

Johannesburg is South Africa's economic hub and is home to the Johannesburg Stock Exchange, the largest stock exchange in Africa. It's a vibrant and diverse economy, with a range of industries ranging from mining to finance, and a growing technology sector.

Based on IMF data, the GDP of Johannesburg makes up almost 18% of South Africa's GDP. Picking property in a well-off city is a wise move because of more jobs, high demand for homes, and property values that stay stable.

What expats usually like the most in Johannesburg is the vibrant nightlife, with its many bars and clubs, as well as the city's diverse culture and cuisine. They also appreciate the city's modern infrastructure, with its efficient public transportation system and its world-class shopping malls.

However, the crime rate of Johannesburg is still very high (with a value of 81, in the top 5 of most dangerous cities in the world). The most common crimes in Johannesburg are burglary, robbery, car theft, and assault.

A good point for a property investor - Johannesburg has a mass rapid transit system known as the Gautrain which connects the city to the greater Gauteng Province.

Access to healthcare in Johannesburg is very good, with a Healthcare Index of 60. Good healthcare facilities is a positive indicator in a real estate market.

Finally, it is worth noting that the University of the Witwatersrand ranks among the top 300 universities in the world.

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Renting out in Johannesburg

This section is for you if you're interested in purchasing property not for personal residence, but rather for the purpose of renting it out to generate rental income.

Long-term

Tenant Profiles in Johannesburg

According to the data reported by Wikipedia, the home ownership rate in South Africa is 70%, which is average.

It means that, if you decide to buy and rent out in Johannesburg, there will be a good number of people who can become your potential tenants.

If you decide to buy and rent out to long-term tenants, you should target professionals, families, and students in Johannesburg. There are also many international tenants who are attracted to the city's vibrant culture and job market.

Here is a little summary table we've made for you.

Rental yields

These days, Johannesburg presents attractive opportunities in terms of rental yields. In fact, you can easily achieve yields above 9% due to the city's high demand for rental properties and relatively low property prices.

The best rental yields in Johannesburg come from properties in areas with a high demand for rental accommodation, such as student accommodation and low-cost housing, due to the city's large student population and affordable housing shortage. Properties in high-demand areas typically have higher occupancy rates and lower vacancy periods, which result in higher rental yields.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Johannesburg are taxed at 20%, which is rather good.

Short-term

You could also decide to rent short-term to business travelers, tourists, students, and people relocating to Johannesburg. Additionally, you could rent to those looking for a short-term stay while attending events and conferences in the city.

If you decide to go with that option, look for properties in the suburbs of Parktown, Rosebank, Melville, and Maboneng. These areas are known for their vibrant culture and are popular with short-term tenants.

Currently, there are approximately 9,000 active Airbnb listings in Johannesburg, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $55.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Johannesburg can make around $400 per month. Also, the average occupancy rate is estimated at 45%.

Is it worth buying real estate in Johannesburg then?

Buying a property in Johannesburg can be a smart move for those planning to settle down in the city for the long haul. If you're looking to establish stability and build equity, Johannesburg's low property price-to-rent ratio, which means you'd need only around 9 years of rental payments to cover a property's price, is a strong incentive. It's an ideal choice for professionals, expats, families, or anyone making Johannesburg their long-term home.

The relatively affordable property prices, compared to global cities like New York or even other South African cities like Cape Town, make it an appealing option. Moreover, Johannesburg's stable economy and forecasted GDP growth rate can signal a healthy real estate market, as a growing economy typically drives up property demand and prices.

On the flip side, Johannesburg isn't without its challenges. The city grapples with a high crime rate, which can be a significant concern for residents and property owners. While certain neighborhoods may offer more safety, thorough research is crucial.

Additionally, some areas face issues like unresolved land claims, power outages, mining subsidence, and wildlife encroachments, all of which can affect property stability and functionality. Therefore, before buying, carefully consider the location and weigh the potential drawbacks against the benefits.

In conclusion, buying a property in Johannesburg can be a wise decision if you're planning to stay long-term or if you're interested in generating rental income. However, be diligent in your research, choose your location wisely, and be aware of the city's challenges, especially the high crime rate, as you navigate the Johannesburg property market.

Make sure you understand the real estate market in Johannesburg

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.