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Johannesburg - While building activity has slowed compared to levels seen in the mid-2000s, current activity remains dominant in Gauteng, followed by the Western Cape, KwaZulu-Natal and the Eastern Cape.
Since coming off the boom of the mid-2000s, housing market activity appears to have settled into a “new normal”, according to the latest Standard Bank [JSE:SBK] Property Viewpoint (RPV) released on Monday.
Almost half the flats and townhouses built in South Africa between 2001 and 2011 were erected in Gauteng, which saw net inward migration soar to over one million people over that timeframe.
Gauteng also has the highest population density in the country with approximately 675 people per square kilometre, compared to a national average of 43 people per square kilometre.
“As the economic hub of South Africa, migration to Gauteng is to be expected, but the past decade has shown an above average increase in building activity in the province,” said Steven Barker, head of home loans at Standard Bank.
Gauteng also leads South Africa in terms of new property registrations with about a third of all freehold listings in South Africa last year occurring in the province, compared to just over 20% for the Western Cape.
The Standard Bank property data indicates that approximately 60% of freehold registrations last year were for purchase prices below R500 000 and about a fifth for properties valued between R500 000 and R1m.
This compares to about 80% of registrations for properties priced below R500 000 in 2003, indicative of the rise in property prices across all price bands over the last decade.
Gauteng also accounted for approximately half of all sectional title registrations over the last decade.
Nevertheless, deeds office data shows that registrations of sectional title properties in South Africa have dropped from a peak of approximately 110 000 units in 2007 to just below 60 000 in 2012, taking its cue from the overall moderating market.
Rental market
The RPV reveals that the one area where Gauteng does not lead other provinces is in flat rental inflation.
The province mustered rental inflation of just 4.6% year-on-year as of July 2013, below the national average of 4.9% and lower than the Western Cape and KwaZulu-Natal which saw rentals increase 4.9% and 5.0% respectively over that period.
“It appears as if the supply response in the province may be doing its part in keeping rental inflation in check,” said Barker.
“The steady stream of new residential developments in Gauteng does have a cooling effect on rental inflation compared to other provinces in South Africa, which don’t experience as much building activity”.
Interestingly, the Free State leads the stakes in terms of home ownership with almost two thirds of households in the province residing in homes under various stages of ownership.
Although South Africans are displaying an increasing propensity to rent according to the latest Standard Bank data - approximately 25% of households - the majority of citizens continue to favour home ownership.
Gauteng has the highest appetite for rental accommodation with 37% of households in the province opting to rent.
Defaulting on rental obligations
Despite being the economic heartbeat of South Africa, Gauteng fares poorly in terms of rental obligations being settled on time.
Data from credit bureau TPN reveals that just 67% of tenants in Gauteng settled their rental obligations on time in the first quarter of 2013, just behind KwaZulu-Natal at 69% and below the national average of 71%.
The Western Cape boasts the highest percentage of tenants settling their obligations on time at 78%.
TPN reports that the Limpopo province comes in below the national average with 67% of rental obligations settled on time, while the Eastern Cape and Mpumalanga pip the national average with 76% of rental obligations settled on time.
From a price bracket perspective, rentals of between R3 000p/m and R12 000p/m were the best performers in the first quarter of this year, with an average of 71% of tenants settling their obligations on time.
For rentals above R25 000 per month, only 51% of tenants settled their obligations on time and almost a quarter made only partial payments.
- Fin24
Since coming off the boom of the mid-2000s, housing market activity appears to have settled into a “new normal”, according to the latest Standard Bank [JSE:SBK] Property Viewpoint (RPV) released on Monday.
Almost half the flats and townhouses built in South Africa between 2001 and 2011 were erected in Gauteng, which saw net inward migration soar to over one million people over that timeframe.
Gauteng also has the highest population density in the country with approximately 675 people per square kilometre, compared to a national average of 43 people per square kilometre.
“As the economic hub of South Africa, migration to Gauteng is to be expected, but the past decade has shown an above average increase in building activity in the province,” said Steven Barker, head of home loans at Standard Bank.
Gauteng also leads South Africa in terms of new property registrations with about a third of all freehold listings in South Africa last year occurring in the province, compared to just over 20% for the Western Cape.
The Standard Bank property data indicates that approximately 60% of freehold registrations last year were for purchase prices below R500 000 and about a fifth for properties valued between R500 000 and R1m.
This compares to about 80% of registrations for properties priced below R500 000 in 2003, indicative of the rise in property prices across all price bands over the last decade.
Gauteng also accounted for approximately half of all sectional title registrations over the last decade.
Nevertheless, deeds office data shows that registrations of sectional title properties in South Africa have dropped from a peak of approximately 110 000 units in 2007 to just below 60 000 in 2012, taking its cue from the overall moderating market.
Rental market
The RPV reveals that the one area where Gauteng does not lead other provinces is in flat rental inflation.
The province mustered rental inflation of just 4.6% year-on-year as of July 2013, below the national average of 4.9% and lower than the Western Cape and KwaZulu-Natal which saw rentals increase 4.9% and 5.0% respectively over that period.
“It appears as if the supply response in the province may be doing its part in keeping rental inflation in check,” said Barker.
“The steady stream of new residential developments in Gauteng does have a cooling effect on rental inflation compared to other provinces in South Africa, which don’t experience as much building activity”.
Interestingly, the Free State leads the stakes in terms of home ownership with almost two thirds of households in the province residing in homes under various stages of ownership.
Although South Africans are displaying an increasing propensity to rent according to the latest Standard Bank data - approximately 25% of households - the majority of citizens continue to favour home ownership.
Gauteng has the highest appetite for rental accommodation with 37% of households in the province opting to rent.
Defaulting on rental obligations
Despite being the economic heartbeat of South Africa, Gauteng fares poorly in terms of rental obligations being settled on time.
Data from credit bureau TPN reveals that just 67% of tenants in Gauteng settled their rental obligations on time in the first quarter of 2013, just behind KwaZulu-Natal at 69% and below the national average of 71%.
The Western Cape boasts the highest percentage of tenants settling their obligations on time at 78%.
TPN reports that the Limpopo province comes in below the national average with 67% of rental obligations settled on time, while the Eastern Cape and Mpumalanga pip the national average with 76% of rental obligations settled on time.
From a price bracket perspective, rentals of between R3 000p/m and R12 000p/m were the best performers in the first quarter of this year, with an average of 71% of tenants settling their obligations on time.
For rentals above R25 000 per month, only 51% of tenants settled their obligations on time and almost a quarter made only partial payments.
- Fin24
