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The South African residential property market is showing remarkable resilience.
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CEO Andrew Golding outlines five trends from the 2017 Pam Golding Properties Residential Review:
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1. SEMIGRATION IS NOT ONLY TO THE WESTERN CAPE
From January 2016, 33% of relocating South Africans made the Western Cape their destination of choice. Agents have reported substantial interest from Gauteng buyers, and semigration remains a key catalyst in house price inflation in the region. As Cape Town’s property prices soar, potential buyers are turning their attention to KwaZulu-Natal. Lifestyle and good prices are also attracting buyers to the Garden Route where interest is growing, in Knysna and Plettenberg Bay to George and Mossel Bay.
The Gauteng region remains the centre of business and commerce for southern Africa and continues to attract more than 300,000 people annually from around the country, the African continent and globally.
2. SECTIONAL TITLE GROWTH OUTSTRIPS FREEHOLD
While only 12% of South Africa’s housing stock of 6.45-million units is sectional title, demand for sectional title properties is growing rapidly and apartment prices are holding up well against freehold property. The Pam Golding Properties Index shows the sectional title house price index rose by 5.27%
year on year in Q3 2017, while the corresponding full title house price index increased by 2.95%. Smaller properties in the sectional title market showed the strongest price inflation of 9.3% in the same period. Lightstone Property reports that sectional title accounts for 14.8% of the total value (R5-trillion) of the residential market. Freehold properties comprise 69.7% and estates 15.5% of the total value.
3. ESTATE PROPERTIES ARE MORE VALUABLE
Lightstone has shown that on average, estate properties are more valuable than non-estate
properties. The prices of homes on estates tend to be less volatile, hence a better investment option during challenging times. Lightstone says at least one in 10 South Africans choose gated communities when making residential property purchases.
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4. THE LUXURY SEGMENT IS DOWNSCALING
The demand for well-located sectional title apartments with low maintenance and running costs is not limited to first-time buyers. People downscaling due to changing lifestyle requirements make up a significant proportion of investors.There is a growing downscaling trend towards smaller, but not necessarily less expensive properties.
5. MULTI-GENERATIONAL LIVING ON THE RISE
Multi-generational living or extended family living, with the associated benefits of pooled resources and cost efficiencies, is making increasing economic sense. Adults are moving back home to occupy a cottage or second dwelling on their parents’ properties. Rising costs and a shortage of affordable retirement accommodation are contributing to this trend.
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