Tale of many mar­kets

But best bar­gains in R1m and less bracket

Finweek English Edition - - Property - JOAN MULLER

WITH THE NUM­BER of house sales down an es­ti­mated 50% to 60% so far this year, South Africa’s res­i­den­tial prop­erty mar­ket fi­nally ap­pears to be mov­ing into value ter­ri­tory. How­ever, dis­count buy­ing op­por­tu­ni­ties are more lo­ca­tion spe­cific than ever, with a marked vari­ance emerg­ing in house price move­ments be­tween dif­fer­ent prov­inces, dif­fer­ent cities and, of course, dif­fer­ent sub­urbs.

True, the lat­est over­all data from banks and mort­gage orig­i­na­tors show av­er­age house price move­ments coun­try­wide re­mained in a fairly nar­row band on an an­nu­alised ba­sis in Oc­to­ber – from Absa’s high of 1,2% to ooba’s low -6,6%.

But the growth gap widens sig­nif­i­cantly when you start looking more closely at pro­vin­cial, city and sub­urb level. For ex­am­ple, Absa fig­ures show while house prices in East Lon­don were still racing ahead at 19,8% in third quar­ter 2008 year-on-year, those in Bloem­fontein and Pre­to­ria fell by -7,6% and -6,9% re­spec­tively over the same pe­riod (see ta­ble).

The pic­ture looks even more dis­crepant when coastal ar­eas are com­pared. Absa’s in­dex, which tracks trans­ac­tions fi­nanced through its own mort­gage book, shows house prices on the Cape West Coast were up a hefty 29,8% in third quar­ter 2008, while prices on KwaZulu-Natal’s north coast were down -13,1% over the same pe­riod.

Price growth dif­fers equally as much at the sub­ur­ban level. A search on the Knowl­edge Fac­tory’s SA Prop­erty Trans­fer Guide web­site shows that for the year to endAu­gust 2008 price move­ments in Jo­han­nes­burg alone var­ied be­tween +32% for Dou­glas­dale in Four­ways to a drop of -57% for Berea, on the out­skirts of Jo­han­nes­burg’s CBD.

There’s also a sig­nif­i­cant dif­fer­ence when var­i­ous sized prop­er­ties are com­pared. FNB’s lat­est hous­ing data show prices of smaller free­hold homes (one or two bed­rooms) dropped nearly 12% in the third quar­ter, while big­ger, three-bed­room homes were still up 9,4% over the same pe­riod.

In­dus­try play­ers con­cede it’s be­com­ing in­creas­ingly chal­leng­ing to com­pile ac­cu­rate house price statis­tics be­cause the dra­matic drop in sales vol­umes makes year-on-year com­par­a­tive anal­y­sis less re­li­able.

With house price data cur­rently er­ratic, in­vestors will no doubt find it dif­fi­cult to gauge which ar­eas and type of prop­er­ties now of­fer the best value. But what does seem clear is the cheaper end of the mar­ket is gen­er­ally ex­pe­ri­enc­ing more price pres­sure than higher priced sub­urbs.

Pam Gold­ing Prop­erty Group CE An­drew Gold­ing con­firms prices at the lower end are now slow­ing more rapidly than other seg­ments of the mar­ket. He says there are now a num­ber of ar­eas with good growth po­ten­tial through­out SA where in­vestors can pick up prop­er­ties for less than R1m.

In the West­ern Cape’s Over­berg re­gion of Robert­son on the R62, brand new twobed­room homes are on the mar­ket for around R850 000. Gold­ing says Gaut­eng’s East and West Rand also of­fer plenty of prop­er­ties be­low R1m.

The south of Jo­han­nes­burg is also re­garded as rel­a­tively cheap, with soughtafter sub­urbs such as Glen­vista, Bas­so­nia and Mey­ers­dal still priced at up to 50% less than like-for-like prop­er­ties in Jo­han­nes­burg’s north­ern sub­urbs.

Coastal towns along the Gar­den Route con­tinue to lure those “sem­i­grat­ing” from city life, which should sup­port above av­er­age cap­i­tal growth over the longer term.

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Source: Absa

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