Housing in Southern Africa July 2015

Housing

Lower end residential

A lthough buffeted by a range of economic headwinds, the South African residential prop- erty market’s gradual slowdown in national house price growth in fact disguises a range of diverse trends – many of which remain positive, according to Dr Andrew Golding, Chief Executive of the Pam Golding Property group. While the index continues to ease, recording an annual growth rate of 5.92% in April, the slowdown in house price inflation remains gradual – with the annual increase in prices just 0.76% below the cyclical peak reached in September 2014. Golding adds: “Notwithstanding the fact that house price inflation at a provincial level appears to be los- ing momentum, within the country’s major metropolitan areas prices continue to accelerate, registering healthy growth rates. Limited land availability within these areas, com- bined with rapid urbanisation and migration between metros – with a steady influx of people seeking economic opportunities, are contrib- uting to a steady increase in metro house prices.” When comparing the four metro regions, it is clear that house prices in the Cape Townmetro are outperforming by a consider- able margin, followed by Tshwane (Pretoria), Johannesburg and eThe- kwini (Durban metro). So although KwaZulu-Natal has overtaken the Cape as the top performing regional residential property market in terms Pam Golding Residential Property Index for June 2015 reports that the lower end of the housing market continues to thrive.

currently living in informal settle- ments,” says Golding. The trends in the performance of house prices within the various price bands remains broadly unchanged – with the lower price band (below R1 million) continuing to register the strongest performance (+8.96%) in April. Within the three major regions, the performance of house prices in the lower price band varies sig- nificantly. In the outperforming KZN housing market, this category con- tinues to register robust price growth (+18.29%) followed by the Cape (+12.35%) and Gauteng (+8.96%). A further factor supporting de- mand in the lower price band is the growing presence of first-time buy- ers in the market. The percentage of

of house price growth, Cape Town continues to dominate. “While the outlook for the econ- omy and hence the housing market remains relatively modest, there are clearly areas of robust house price inflation within the various market segments. After moderating during the global financial crisis and sub- sequent local economic recession, house price inflation in the afford- able price band has rebounded - ac- celerating strongly since early-2014. Price inflation in this category is fast approaching the levels recorded during the 2004 boom, with a robust annual growth in prices of 30.65% in April 2015. The growth in affordable house prices undoubtedly reflects the growing housing backlog, with an estimated twomillion households

July 2015