There are about 6 000 closed communities and estates in South Africa, comprising 318 000 homes worth an estimated R643bn in total. Estate living is by no means unique to South Africa, having come to this country in the 1980s, but it only really took root in the mid-‘90s. Pam Golding Property Group CEO Andrew Golding says that it is primarily the security offered by the estates that makes them so popular with homebuyers, but this is by no means the only reason.

“Key factors contributing to the popularity of estate living are security and location. Those that are situated either in or around major metropolitan areas or business hubs and are close to good schools are proving to be among the most sought-after and successful,” says Golding. “Many buyers also perceive that the demand for this type of housing has created a sound investment that will appreciate in value or generate good rental income. Estate homes have in the past been on the upper end of the property price spectrum. Many buyers typically buy up from their previous homes and often for as much as twice the value of the non-estate-based property they sold.”

Regionally, Gauteng dominates. According to the Pam Golding Property Group’s research findings, almost 50% of South Africa’s residential estates are to be found in Gauteng, and about 25% in the Western Cape.

On a macroeconomic level, there is expected to be slower growth in residential demand, as reflected in the forecast of 0,9% growth in FNB’s Valuers’ Demand Strength Rating. This follows a growth rate of 7% last year. Residential supply is expected to increase, too, and the result of slowing demand growth and a return to mildly positive residential supply growth would be a slower rate of increase in the FNB Valuers’ Market Strength Index from 5,5% in 2014 to 0,4% in 2015, before it turns to negative growth of about -0,5% in 2016.

“However, and perhaps surprisingly,” says John Loos, household and property strategist at FNB, “we forecast a slight acceleration in average house price growth in 2016 to 5,6%, whereas 2015’s average house price growth is expected to come in at 5,3% The reason has to do with the general inflationary environment dipping in 2015 and, it is expected, recovering in 2016. The result of an expected higher CPI inflation rate in 2016 is the forecast of a higher average wage inflation rate next year compared with 2015, which could drive a slight, renewed acceleration in nominal house price inflation too.”