Real Growth in Metro Areas

 

23 Jan 2014

 

According to Francois Venter, director at Jawitz Properties, the metropolitan areas are likely to see real property price growth compared to rural and coastal areas.

Priced at R1.675 million, this three bedroom home in Wellington has picturesque views of the Boland mountains and vineyards, an open plan living area with beautiful wooden floors and a fireplace. Click here to view.

Well priced properties in the metro areas will sell fairly quickly, whereas in rural and coastal areas the time it takes to sell a property is much longer.

“The weak Rand will continue to put pressure on inflation which will in turn impact on prices across the board and particularly on food and petrol, making affordability an issue for some,” he says.

However, he says interest rates were at an all-time low last year, which sparked buyer demand, and this is likely to continue in 2014.

Banks are also easing on lending which opens the market to more buyers, but he says, we can expect low demand for property although there will be a good supply of properties in rural and coastal areas, and pent-up demand yet a low supply in metropolitan areas.

The Absa December House Price Index report shows year-on-year (y/y) growth in the average value of homes in the middle segment of the housing market slowing down further, after peaking around April last year.

This was the result of base effects and continuing month-on-month price growth of less than 1 percent up to year-end.

Average nominal y/y price growth was in single digits in all three middle-segment categories of housing in 2013 with the average nominal value of small homes being R778 000, R1 085 million for medium-sized homes and R1.72 million for large homes.

Absa says we can expect single-digit nominal house price growth this year, while real price growth will be constrained by consumer price inflation which is expected to be just below the 6 percent.

According to ooba data, December ended with positive y/y price growth and higher y/y average bond sizes and a higher bank approval rate.

At R933 528, the average purchase price recorded by ooba in December shows a healthy y/y price growth of 7.9 percent, while the average first-time buyers’ purchase price in December was R708 989, 6.6 percent higher y/y.

This one bedroom apartment in Mouille Point,Cape Town, is selling for R3.9 million. Clickhere to view.

The average bond size originated by ooba was R793 931 in December, 9.0 percent higher y/y and the average bond size for first-time buyers in December was R627 021 – 9.9 percent higher y/y.

The mortgage originator’s effective approval rate of 65.2 percent shows a y/y improvement of 0.5 percent.

Meanwhile, the Rawson Property Group reports that the Boland town of Wellington, which has around 60 000 inhabitants altogether, is gaining popularity with buyers, not only from other Boland towns but also from Cape Town and Gauteng.

As a result, middle bracket housing (priced from R1 million to R1.3 million) is seeing price increases of close to 10 percent per annum with stock shortages being in the market.

Tertius Joubert, area franchisee, says Wellington is well located, only 65km from Cape Town CBD and close to BellvillePaarlStellenbosch and the Cape Town International Airport.

Wellington also offers value with buyers paying between 30 and 40 percent less than what they would pay for similar homes in the more popular areas of Cape Town.

He points out that buyers at the lower end of the middle class bracket can still find apartments priced from as low as R400 000 for a one bedroom unit and R500 000 for a two bedroom unit.

“These prices continue to rise because there is a steady demand from the students at the agricultural and teacher training colleges, both of which are said to be among the best in South Africa today.”

At the upper end of the middle class home bracket, Wellington can offer gracious Victorian and Edwardian as well as ultra-modern homes and the Rawson Wellington team say that they sold five such homes late last year priced from R1.5 million to R3 million.

“Demand for upper bracket homes is much softer than for those in the middle bracket, however, the long-term appreciation prospects are excellent and offer quite exceptional value for money,” he adds. – Denise Mhlanga

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