Township properties lagging

Johannesburg - The housing market in South Africa's most important townships - where at one point prices were showing the best growth - is now lagging considerably behind that in metropolitan areas.

According to First National Bank's (FNB) township house-price index, in the fourth quarter of 2009 township house prices were 6.6% down on the corresponding quarter of the previous year and 2.9% down on the third quarter of the same year. This index is based on transactions registered at the Deeds Office.

This means that the value of an average house in a township during the fourth quarter declined to R250 255, from R268 021 in the fourth quarter of 2008.

In contrast, the price of an average house in metropolitan areas was 0.5% lower than in the corresponding quarter of the previous year and 0.1% better than in the third quarter.

The average price of a house in metropolitan areas was R856 060 in the fourth quarter of 2009.

FNB property analyst John Loos says the housing market's weak performance in townships is in sharp contrast to that a few years ago when this market achieved growth of 38.1% in the fourth quarter of 2006.

This growth can be attributed to normalisation of the township market over the past decade, where sentiment regarding these areas turned positive.

He ascribes the downturn to the recession, especially the job losses in the mining and manufacturing sectors.

He says government's strong focus on the affordable housing market is good news.

Direct steps by government and the banks have however limited impact on the affordable housing segment.

- Sake24.com

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