Property outlook good for KZN

Regional market set to be the most vibrant

THE KwaZulu-Natal residential property market looked set to be the most vibrant of the major regional markets this year in terms of potential house price growth, according to the Pam Golding Property Group.

Andrew Golding, the chief executive of the group, said yesterday the KwaZulu-Natal property market was one of the first to react to the 2007 downturn and had been relatively slow to respond to the current upturn.

But Golding said the growth in house prices in this region, based on the Pam Golding residential property index, had accelerated sharply since mid2013 to close the price-performance gap first with Gauteng and, more recently, the Western Cape.

Golding attributed the revival in the KwaZulu-Natal residential market largely to growing interest in the region’s lifestyle offering.

“The relocation of the airport to the North Coast, the prevalence of estates and good schools, along with the relative value for money on offer, has seen an influx of commuters, who have chosen to move to the region with their families.

“Investors have been re-entering the market, and with demand exceeding supply, the region is experiencing significant stock shortages,” he said.

Golding said the recovery in national house prices after the temporary setback in 2011 had steadily gained momentum to achieve healthy average annual growth of 6.6 percent last year despite lacklustre economic growth and two modest interest rate hikes last year.

Inflation rate

He said this was the first time the growth had exceeded the average inflation rate since 2010 and was a marked improvement in the average annual increase of 5.2 percent in 2013 and 3.5 percent in 2012. South Africa’s inflation rate averaged 6.1 percent last year.

Golding said the relative outperformance of the Western Cape residential property market could be attributed to the steady relocation of many South African homeowners to the Cape, coupled with the ongoing shortage of stock available in the region.

However, Golding said it appeared the Cape housing market’s period of price outperformance had come to an end, with house price growth in the region peaking last year and now approaching the national average.

Absa reported yesterday that nominal middle segment house price growth last month declined to 8.4 percent year on year from 8.9 percent in January and the recent 9 percent high in September.

Jacques du Toit, a property analyst at Absa Home Loans, said the gradual declining trend in nominal house price growth since late last year was much in line with continued subdued real economic growth of 1.3 percent year on year in the final quarter of last year.

Du Toit said house price growth averaged 1.5 percent last year. Some real house price growth was expected this year on the back of the outlook for inflation, he said.

“The somewhat higher interest rates and continued low level of consumer confidence could also have played a role in the lower house price growth in early 2015,” he said.