Owning a home in Africa is one of the most promising investments anyone can make today. The real estate market in Africa is experiencing a transformation. The United Nations predicts that by 2050, Africa will be home to six of the world’s ten largest megacities. This is due to factors like urbanization and economic growth. However, as more and more people move to cities for jobs and a better life, these cities start to change, inherently influencing a significant rise in property prices.
This can be exciting and challenging, particularly for those who want to buy a home. The World Bank estimates that over 50% of African urban dwellers live in informal settlements due to a lack of affordable housing options. To better analyze this affordability database platform, Numbeo focuses on how easy it is to purchase property with local wages, not necessarily the overall highest property prices in a particular place. This is accessed using the price-to-income ratio (PTIR). The PTIR is a crucial metric used to assess housing affordability. It compares the median apartment price to the median family’s disposable income, expressed as several years. Cities where the median apartment cost might be significantly higher than residents’ average income could create a housing affordability crisis.
A lower PTIR, on the other hand, indicates greater affordability. This means a person would need fewer years of income to buy a median-priced apartment. Conversely, a higher PTIR suggests a strain on residents’ finances, as saving enough for a property takes longer. With this understanding, here are the top 5 African cities with the most expensive real estate in 2024.
1. Lagos, Nigeria
Lagos is often referred to as the land of opportunity. This nickname comes from Lagos’ reputation as Nigeria’s undisputed economic hub. This is mainly because the city serves as the main entry point for international trade to Nigeria. With a population exceeding 15 million, Lagos has one of the fastest-growing populations in Africa. While this is a repercussion of economic growth and urbanization in the city, it inadvertently affects real estate. The city’s high price-to-income ratio is 19.2, making it the city with the most expensive real estate in Africa. The United Nations predicts Lagos will be one of Africa’s six largest megacities by 2050.
2. Cairo, Egypt
Cairo, the capital of Egypt, also presents an expensive housing market with a price-to-income ratio of 18.4. Similar to Lagos, a growing population contributes to this. Egypt is the third most populated country in Africa and the 14th globally. According to JLL’s Cairo Real Estate Market Overview Report for Q1 2024, the residential sales prices in Cairo’s secondary market witnessed a surge, with an increase of nearly 83% in the 6th of October area and a staggering 95% in New Cairo.
3. Nairobi, Kenya
Nairobi’s price-to-income ratio is 11.5. This means it would take the average person in Nairobi roughly 11.5 years to save enough for a median-priced apartment, assuming they dedicate their entire salary toward the purchase. Like Cairo, Nairobi is the capital of Kenya. The city’s role as a regional economic and transportation center attracts businesses and residents. As a result, the city has experienced exponential growth, from 290,000 residents in 1960 to over 5 million in 2023. However, many of Nairobi’s growing middle class find themselves priced out of the formal housing market. The purchasing power index in Nairobi is 34.4.
4. Cape Town, South Africa
South Africa remains a major player in African real estate. South Africa received the highest real estate investment volumes in Africa in 2022, at around $2.2 billion.
Cape Town is the most expensive metro to buy a home in South Africa. The average price of residential property in 2021 was almost 1.6 million South African rands. However, the average disposable income of South African households is 50,500 South African rand, approximately $2,738 U.S. dollars. Cape Town has a price-to-income ratio of 5.4.
5. Durban, South Africa
Durban, located on the East Coast of South Africa and the third largest city in the country, has a price-to-income ratio of 4.2, which is more moderate compared to the other four cities. It has grown by 34,125 in the last year, which represents a 1.06% annual change. However, Durban offers more affordable housing options relative to residents’ income levels. The purchasing power index in Durban is 82.4.