Housing in Southern Africa July 2015

Housing

market performs

Andrew Golding

economic activity within each prov- ince, local cities continue to experi- ence relatively rapid rates of urban- isation. With limited land-availability within each metro and with growing congestion discouraging long daily commutes, the housing market is seeing a steady increase in densifi- cation. As a result, there has been a steady increase in the number of sectional title properties in South African housing markets. “This can be seen when consider- ing what percentage of residential building plans passed are for flats and townhouses rather than freehold properties. In the first quarter of 2000, sectional title units accounted for just 10.9% of total residential building plans passed. However, by the first quarter of 2008, sectional ti- tle accounted for 40.3%of total plans passed. The percentage declined during the post-crisis economic downturn but has subsequently risen – reaching 38% in the first two months of 2015.” He concludes: “The growing de- mand for sectional title properties is not just about affordability, but also security and the growing trend to smaller, more conveniently located properties. This trend is evident in major cities around the globe.” ■

Gauteng as a whole. However, in re- cent months, as house price inflation in the province has started to soften, price inflation in Johannesburg and, to a greater extent in Tshwane, has accelerated. The last time growth in metro house prices exceeded growth in the province overall was in the early 2000s - ahead of the 2004 hous- ing boom. Similarly in the Western Cape, average regional house price infla- tion is clearly losing momentum, while Cape metro house prices have accelerated sharply since mid-2014. This is the first time that this stark divergence between metro and provincial house prices has been recorded since 2000. Golding says: “Given that the metro areas are the epicentre of

first-time buyers has risen steadily in recent years and accounted for 53% of total sales during the first quarter, according to bond originator Ooba. From mid-2013 to early-2015, the Western Cape enjoyed the strongest house price inflation among the three major provinces. However, acceleration in the rate of growth in house prices in KZN saw the prov- ince begin to outperform the Cape in early-2015. Since then KZN house prices have continued to strengthen while the other major provinces - and South Africa overall, have experi- enced a slowdown in the pace of house price inflation. During the past decade, house price inflation in Johannesburg and Tshwane has closely tracked the performance of house prices in

July 2015