Real Estate Investor Magazine South Africa September 2013 | Page 23

REI Residential Township House Price Growth Ahead of Suburbs Keeping Up Maintenance Inter-Provincial Repeat Home Buyer Migration Trends Areas formerly classified as “Black Areas” under Apartheid Era classifications have outperformed the former White “suburbs” in terms of house price growth for much of the period since 2006, playing catch up off a very low price base. In the 2nd quarter of 2013, the FNB Former Black Township House Price Index for Major Metro regions rose by 8.4% year-on-year. This was mildly higher than the 6.3% recorded for the entire market in the six major metros (Ethekwini, Cape Town, Nelson Mandela Bay, Ekurhuleni, Joburg and Tshwane). Townships markets represent the most affordable part of the residential market, with an estimated average transaction price of R281 953 as at the second quarter, and have shown to be a bit more cyclical than the overall metro residential market. In recent months there has been a marked increase in the number of people buying into multiple unit developments, gated estates and sectional title schemes – not for their own use but as an investment. While this is a welcome trend, it has to be accepted that it can lead to problems, says Bill Rawson, Chairman of the Rawson Property Group. According to FNB, household mobility appears to be rising over the long term, with a greater portion of households relocating to more far off destinations, predominantly for work purposes. FNB’s research also confirms the Western Cape’s apparent competitive advantage, given the lowest percentage of repeat buyers leaving the province, as well as by far the strongest net inward migration rate of repeat buyers from other provinces. It is not surprising as the province’s economy is the second largest after Gauteng, and also boasts the second highest growth rate, slightly behind that of Gauteng. Cape Town’s combination of good economic opportunity along with a quality lifestyle appears to be the winning recipe in attracting both wealth and skills to the province in relatively abundant quantities. Valuable Input The main problem, he says, is that certain investors, while enjoying the current scenario in which rents are rising fast year-by-year, tend to be very slack about ensuring that their properties – as well as those of their neighbours and communa l g rounds – a re properly maintained. “Today’s buy-to-let investor is inclined to see his investment as being in much the same category as a bond or share purchase. He sees no need to be closely involved with it.” Bill Rawson, Chairman, Rawson Property Adrian Goslett, CEO, RE/MAX “As a rule of thumb, I believe that not less than 5% and up to 10% of the rentals each month should be set aside for maintenance purposes.” ““It was not that long ago that a desirable home in a good location may have sat on the market for months. However, that seems to have seen a turn around with many sellers receiving offers in a much shorter time frame.” www.reimag.co.za Samuel Seeff, Chairman, Seeff ‘There is a notable shift in buyer demographics in the more affordable and middle-class suburbs in the main metropolitan areas. In some instances, more than half of all buyers are now from the black middle class demographic group.” Brian Wilkinson, CEO, GBCSA “We are confident that the green building movement in South Africa will continue this upward trajectory and that we will increasingly see green building practices becoming the norm.” Gerald Leissner, Chief Executive Officer, Arrowhead Properties “We see the residential market as an important new avenue for growth. And it offers great diversification from commercial property.” September 2013 SA Real Estate Investor 21