The Gauteng house price growth rose 6.8 percent in the first quarter of 2012, the highest growth rate in the Gauteng House Price Index since Q2 2008.
Gauteng is a diversified services-driven economy and with its property market being overwhelmingly primary residential demand-driven, is typically less volatile than many of the country’s smaller property regions.
According to the FNB Gauteng House Price Index, the average house price rose 6.8 percent and the national average price growth rate was 7.1 percent for Q1 2012.
Gauteng is a diversified services-driven economy and with its property market being overwhelmingly primary residential demand-driven, is typically less volatile than many of the country’s smaller property regions.
The report notes that in real terms, with consumer price inflation at just above 6 percent, it would appear that the province’s house price growth rate has moved into slightly positive terrain.
The average property transaction price for Gauteng was R866 806 in Q1 2012, according to FNB’s data.
FNB Home Loans property strategist John Loos says the recovery has been tough going.
He says this price level is only 9.3 percent higher than the level reached in Q2 2008, which was just before price deflation set in to the province’s market.
Loos explains that when looking at major regions in Gauteng, the City of Johannesburg shows the most strength in its property market compared to Ekurhuleni and Tshwane.
This emerges in both the average price growth rates as well as in FNB Valuers’ Average Market Strength ratings by metro.
Loos says in Q1 2012, the FNB Market Strength Indices per Gauteng Metro pointed to the City of Joburg as having the best balance between supply and demand.
The city recorded a level of 49.4, just shy of the crucial level of 50 at which the demand rating would match the supply rating while Tshwane recorded (45.48) and Ekurhuleni (45.65).
He says the FNB City of Joburg Price Index rose by 7.2 percent year-on-year in the first quarter compared to lower 3.5 percent rates of increase for both Tshwane and Ekurhuleni in the same quarter.
He says the FNB City of Joburg Price Index rose by 7.2 percent year-on-year in the first quarter compared to lower 3.5 percent rates of increase for both Tshwane and Ekurhuleni in the same quarter.
Petro van Heerden, valuations manager at the City of Joburg explains that their perception is that Gauteng’s market stability currently lies in and around its key City of Joburg northern suburbs business nodes.
She says the northern suburbs are not immune to recessionary shocks such as the one of 2008/9, but a greater shortage of land for development does assist in supporting the property values in these areas.
“The economies of the region’s prime business nodes are believed to hold up better as many corporates streamline costs by centralising certain functions to head offices, many of which are in Joburg’s northern business nodes.”
Van Heerden says by comparison the West Rand residential market doesn’t quite possess the market strength of the northern suburbs, possibly still dealing with supply overhangs created by a building boom of a few years ago.
Rising traffic congestion and transport costs and the Toll Roads implementation are likely to benefit Joburg’s northern suburbs relative to the other major regions of Greater Johannesburg, as this sub-region is arguably the province’s key commuter destination.
She says a probable source of support for the overall City of Joburg residential market is the fact that this metro possesses the prime former township region around Soweto.
Soweto has been at the forefront of the transformation from a dormitory township to a more suburban-like character, with major improvements in the area of retail and services.
“This is significantly improving its popularity as a place to live, which in turn is supporting the township component of the City of Joburg’s property market,” says Van Heerden.
Seeff Randburg reports that homes in Sundowner in the north of Johannesburg offer great value for money.
This property measuring 6 443 square metres in Sundowner, north of Johannesburg is selling for R6.999 million through Seeff Randburg
People who sell are usually upgrading to bigger homes or moving to the Western Cape or other regions, either because of job offers or the lifestyle.
Meanwhile, RE/MAX says Centurion has been rapidly transformed from farmland to a central business hub that connects Johannesburg and Pretoria.
It has become one of the best property investment locations in Gauteng and residential property stock cannot keep up with the pent-up demand for new homes that continually outstrips supply, says RE/MAX Jowic broker/owner Willie van den Berg.
His office service areas include Irene, Lyttelton, Kloofsig, Doringkloof, Centurion Golf Estate, Highveld, Irene Farm Village, Cornwall Hill, Pierre van Ryneveld, Waterkloof, Elarduspark and Monument Park.
Van den Berg says property prices are starting to increase due to the fact that good residential stock is scarce and well-priced homes sell fast and asking prices are achieved.
He points out that there is pent-up demand for newly built homes in the area as developers mostly stopped any further building projects in 2008 during the recession.
Property prices start at around R450 000 for an entry level, one bedroom unit on the second or third floor of an apartment complex.
Meanwhile, RE/MAX says Centurion has been rapidly transformed from farmland to a central business hub that connects Johannesburg and Pretoria.
A two bedroom unit on the second or third floor of an apartment complex would cost approximately R550 000, while a three bedroom unit would sell at around R600 000.
Freestanding homes on the ground floor that have a small garden start at R725 000 for a two bedroom home and range up to around R900 000 for a three bedroom, two bathroom unit with a small garden.
Three bedroom homes outside of secure complexes are priced from R1.1million and larger stands of 2 000 square metres in Irene and Centurion Golf Estate and 1ha stands in the upmarket Cornwall Hill start at R3 million.
Buyers range from first-time buyers looking for sectional title units, flats and townhouses to those looking for luxury properties.
Van den Berg says Centurion is a good area in which to invest in property because of its easy access to all major routes, the large range of property types the area offers catering to a wide selection of buyers and the rental income these properties generate.
“Demand for property will continue and prices will increase over the next 12 to 18 months,” he adds. – Denise Mhlanga
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