Prices in townships rising the quickest
THE areas formerly classified as "black areas" under apartheid have outperformed the former white "suburbs" in terms of house-price growth, according to a First National Bank index.
FNB household and consumer strategist John Loos said the FNB former black township house price index for major metro regions rose by 8.4% year-on-year in the first quarter of this 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, Johannesburg, and Tshwane.
"This growth also represents an improvement on the first quarter's 5.7% for township regions," Loos said.
Houses in Nelson Mandela Bay townships are following the trend, with estate agents in the region seeing a rise in the value of the houses in these areas.
Manager at Chas Everitt International Property Group Charlotte Vermaak said different factors were contributing to the rise in the house prices.
"Our experience has been that more sellers in these [township] areas are selling to upgrade to a better or bigger home.
"We have also found that the buyers purchasing into these areas have experienced a significant improvement in their financial ability at a more positive rate than in the higher price bands," Vermaak said.
Derek Ndlovu of Property Port Elizabeth said the interest rate was also an influence on the trend. "The sales in these areas are definitely going up and I can say that the values of the houses are going up as well. I'd say that we have had at least about a 0.2% growth from last year's prices. The low interest rates are also contributing to this trend."
Coega Homes' Danie van Rensburg said the demand for houses in the townships was one of the main causes for the price increases.
"We are definitely seeing a growth in the prices of houses in these areas. It is all about supply and demand and right now there are a lot of buyers and fewer houses to sell and that is what is pushing the house prices up," he said.
Loos said because of the strengthening of the market the growth rate of house prices in the townships would continue to increase in the near future.
"[We] should perhaps expect the township house-price growth rate to mildly outperform the rest in the near term, with the residential market going through a relatively good patch, with interest rates low and access to credit for entry-level buyers good."
Additional reporting by SAPA