20 years ago, the average SA house cost the same as the average new car. Here's how things have changed
Despite the recent slump in the property market, the average house price in South Africa still costs 2.5 times more than the weighted average price of a new light vehicle.
A massive gap has opened up between house and car prices over the past two decades – in 1999, the average new light vehicle almost cost the same as the average house. Both were around the R100,000 mark.
But since then the average house price has rocketed to more than R900,000, while the average new light vehicle (which includes passenger cars, light commercial vehicles, bakkies and double-cabs) is now priced at around R370,000.
“This … is largely attributed to supply and demand, where properties have become sound investments and vehicles lose their value fairly quickly” says Heinrich Coetzee from Lightstone.
Lightstone’s analysis shows that more properties were sold at a cheaper price point in 1999 compared to the smaller volume of properties sold at a higher price point in 2018. This means that more high-end properties have been sold, which dragged up the average house price in South Africa.
”Although we’d need to segment the buyers of this market, we can assume that the shift in purchasing behaviour over the last 10 years can be ascribed to the economic pressure the middle segment of the market faces which wouldn’t necessarily affect the higher end of the market that continue to purchase property at higher price points,” says Coetzee.
Some vehicle brands have seen large price gains in this time, though. After taking inflation into account, the weighted average price (WAP) climbed by almost 50% for Ford, Mazda and Toyota models, while Honda has dropped by 2% since 1999. According to Coetzee the drop in the average Honda price could mainly be attributed to the introduction of the entry level models like the Amaze and Brio.
The average price of a Nissan only grew by 4%. Together with Toyota and Volkswagen, Nissan represented 47% of the market for light vehicles in 1999. But the latest Lightstone research shows that Nissan has been replaced by Ford in the top three, which now together own 51% of the market share.
“When it comes to light vehicle brands (combination of passenger and light commercial), it appears that consumers tend to be brand loyal to the bigger brands and possibly opt for the vehicle which is, in their opinion, the best buy in the long term; especially when taking affordability and reliable after sales service into account,” said Coetzee.
Within the commercial market, Mercedes Benz remained the top brand. Isuzu Trucks has climbed into second place and Hino (a Toyota brand) comes in third.
Source: Business Insider South Africa
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