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July 2015
Housing
A
lthough buffeted by a range
of economic headwinds, the
South African residential prop-
erty market’s gradual slowdown in
national house price growth in fact
disguises a range of diverse trends
– many of which remain positive,
according to Dr Andrew Golding,
Chief Executive of the Pam Golding
Property group.
While the index continues to ease,
recording an annual growth rate
of 5.92% in April, the slowdown in
house price inflation remains gradual
– with the annual increase in prices
just 0.76% below the cyclical peak
reached in September 2014.
Golding adds: “Notwithstanding
the fact that house price inflation at
a provincial level appears to be los-
ing momentum, within the country’s
major metropolitan areas prices
continue to accelerate, registering
healthy growth rates. Limited land
availability within these areas, com-
bined with rapid urbanisation and
migration between metros – with
a steady influx of people seeking
economic opportunities, are contrib-
uting to a steady increase in metro
house prices.” When comparing the
four metro regions, it is clear that
house prices in the Cape Townmetro
are outperforming by a consider-
able margin, followed by Tshwane
(Pretoria), Johannesburg and eThe-
kwini (Durban metro). So although
KwaZulu-Natal has overtaken the
Cape as the top performing regional
residential property market in terms
of house price growth, Cape Town
continues to dominate.
“While the outlook for the econ-
omy and hence the housing market
remains relatively modest, there are
clearly areas of robust house price
inflation within the various market
segments. After moderating during
the global financial crisis and sub-
sequent local economic recession,
house price inflation in the afford-
able price band has rebounded - ac-
celerating strongly since early-2014.
Price inflation in this category is fast
approaching the levels recorded
during the 2004 boom, with a robust
annual growth in prices of 30.65% in
April 2015. The growth in affordable
house prices undoubtedly reflects
the growing housing backlog, with
an estimated twomillion households
currently living in informal settle-
ments,” says Golding.
The trends in the performance of
house prices within the various price
bands remains broadly unchanged
– with the lower price band (below
R1 million) continuing to register
the strongest performance (+8.96%)
in April.
Within the three major regions,
the performance of house prices
in the lower price band varies sig-
nificantly. In the outperforming KZN
housing market, this category con-
tinues to register robust price growth
(+18.29%) followed by the Cape
(+12.35%) and Gauteng (+8.96%).
A further factor supporting de-
mand in the lower price band is the
growing presence of first-time buy-
ers in the market. The percentage of
Lower end residential
Pam Golding
Residential Property
Index for June 2015
reports that the lower
end of the housing
market continues
to thrive.