Tale of many markets
But best bargains in R1m and less bracket
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.