Latest offers

R 3,190,000
2 beds 2 baths
R 3,350,000
104 m² 3 beds 2 baths

Jan 01 2014

Townships Lead House Prices

Posted in Property Finance

No Comments

Areas formerly classified as black townships under apartheid continue to marginally outperform former white suburbs in terms of house price growth, according to FNB household and property sector strategist John Loos, “for much of the period since 2006”.

He said there had been periods in the property cycle in the past 15 years where house price growth in the former black townships had exceeded that of the higher-income former white suburban markets.

But Loos said the longer-term cumulative performance appeared to reveal a township market that had not narrowed the price gap with the suburbs since the late 1990s.

Demand in affordable areas had grown steadily over time but so had supply, led by various affordable housing drives, he said.

True demand, in the areas relys on those households that had the means to buy homes at the prevailing price levels and also wished to do so.

He said the former black township residential market no longer appeared to have very strong demand relative to supply as it did in about 2007.

Loos said this market instead appeared to be relatively well balanced, which was reflected in an average house price growth rate that was not very far out of line with consumer inflation and translated into only mild growth in real terms because extreme demand relative to very limited supply would almost certainly drive real prices higher at a far faster rate.

affordable_housing_cartoonHe said the former black township markets appeared a little more sensitive to interest rates and economic cycles.

In times of market strengthening, house price growth in black townships tended to be higher than the overall major metro house price index but in times of economic weakening and interest rate hiking, the price dips in the township market could be a little more severe, he said; attributing this to lower-income households arguably being more dependent on credit for home buying than higher-income households and they also had less financial buffers to weather periodic economic storms. – Business Report

, ,
  • Southern Suburbs, Cape Town