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market performs
Housing
first-time buyers has risen steadily in
recent years and accounted for 53%
of total sales during the first quarter,
according to bond originator Ooba.
From mid-2013 to early-2015, the
Western Cape enjoyed the strongest
house price inflation among the
three major provinces. However,
acceleration in the rate of growth in
house prices in KZN saw the prov-
ince begin to outperform the Cape
in early-2015. Since then KZN house
prices have continued to strengthen
while the other major provinces - and
South Africa overall, have experi-
enced a slowdown in the pace of
house price inflation.
During the past decade, house
price inflation in Johannesburg
and Tshwane has closely tracked
the performance of house prices in
Gauteng as a whole. However, in re-
cent months, as house price inflation
in the province has started to soften,
price inflation in Johannesburg and,
to a greater extent in Tshwane, has
accelerated. The last time growth in
metro house prices exceeded growth
in the province overall was in the
early 2000s - ahead of the 2004 hous-
ing boom.
Similarly in the Western Cape,
average regional house price infla-
tion is clearly losing momentum,
while Cape metro house prices have
accelerated sharply since mid-2014.
This is the first time that this stark
divergence between metro and
provincial house prices has been
recorded since 2000.
Golding says: “Given that the
metro areas are the epicentre of
economic activity within each prov-
ince, local cities continue to experi-
ence relatively rapid rates of urban-
isation. With limited land-availability
within each metro and with growing
congestion discouraging long daily
commutes, the housing market is
seeing a steady increase in densifi-
cation. As a result, there has been
a steady increase in the number of
sectional title properties in South
African housing markets.
“This can be seen when consider-
ing what percentage of residential
building plans passed are for flats
and townhouses rather than freehold
properties. In the first quarter of
2000, sectional title units accounted
for just 10.9% of total residential
building plans passed. However, by
the first quarter of 2008, sectional ti-
tle accounted for 40.3%of total plans
passed. The percentage declined
during the post-crisis economic
downturn but has subsequently
risen – reaching 38% in the first two
months of 2015.”
He concludes: “The growing de-
mand for sectional title properties is
not just about affordability, but also
security and the growing trend to
smaller, more conveniently located
properties. This trend is evident in
major cities around the globe.”
■
July 2015
Andrew Golding