According to an FNB Area Value Bands report, lower income/price areas of the residential market have the strongest fundamentals underpinning them.
Lower income/price areas of the residential property market in South Africa are said to have the strongest fundamentals underpinning them.
These fundamentals include stronger activity ratings and more noticeable declines in the average time that a property remains on the market prior to getting sold.
Writing in the report, FNB household sector and property strategist John Loos says the value bands include the Upper Income Area with a third quarter average price of R2.038 million, the Middle Income Area (average value of R1.221 million), the Lower Income Area (average value of R790 706) and the Affordable Area with average value of R417 299.
Loos says on a year-on-year (y/y) growth basis, all four value bands have recently moved in a very narrow range and as at the third quarter, the Affordable Area Value Band showed the highest price growth of 6.9 percent followed by Lower Income Areas with 6.3 percent, Middle Income Areas with 5.4 percent, and the lowest growth of 5.3 percent being recorded by Upper Income Areas
On a quarter-on-quarter basis, segments’ price growth comparisons show that the two higher priced area value bands have been losing growth momentum in recent quarters, leading to a mild widening in the price growth gap between the two lower segments and the higher end, in favour of the lower value segment, explains Loos.
He notes that while all four area value bands appear very well-balanced but without any fireworks, early signs of slowing growth in the upper segments could possibly be a sign of household sector financial limitations mounting after a period of slightly stronger general house price growth since early-2012.
Meanwhile, Pam Golding Properties (PGP) reports that the greatest demand for homes across the various price sectors is by far that between R500 000 and R2 million, accounting for 34 percent of the total in rand terms and growing by nine percent in the past 12 months.
Addressing media during an PGP annual media lunch in Cape Town, Dr Andrew Golding, chief executive of the Pam Golding Group, said in the past 12 months the residential property market has performed in line with expectations characterised by slow and steady improvement.
According to Lightstone’s analysis, house prices nationally have seen an average seven percent y/y growth to September 2013, with a CPI rate of six percent.
Golding points out that they have seen a notable increase of 37 percent in PGP’s sales activity of properties priced between R3 million to R5 million, a somewhat more modest increase of 10 percent in the price band from R5 million to R10 million and a marked increase of 60 percent in the top end of the market from R10 million upwards – the latter due to the fact that this high net worth sector was by and large able to sit out the economic recession.
In the year, PGP sold high-end homes including a R110 million home in Fresnaye, a luxury penthouse apartment in Bantry Bay for R34.5 million (the highest price achieved for a sectional title unit in this suburb in the past five years), an apartment in Melrose Arch in Gauteng for R24.561 million and a house in Knysna on the Garden Route for R23 million, while homes exceeding R20 million were sold in the Cape’s Atlantic Seaboard and Boland region. - Denise Mhlanga
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