Township houses shine, survey shows

Johannesburg - Houses in areas formerly classified as black townships outperformed those in former white suburbs in price growth since 2006, First National Bank (FNB) said on Tuesday.

FNB's household strategist John Loos said in the third quarter of 2013, FNB's former black township house price index for major regions rose by 6.9% year-on-year.

"This is slightly higher than the 5.2% revised growth for the previous quarter, and mildly higher than the 5.8% recorded for the entire market in the six major metros [Ethekwini, Cape Town, Nelson Mandela Bay, Ekurhuleni, Johannesburg and Tshwane]," said Loos.

He said the former black township markets showed similar patterns to the higher priced former white suburban markets, except that they were more sensitive to interest rates and economic cycles.

Loos said there was enough supply to cover the demand for houses in the former black townships.

This referred to people who could afford to buy homes.

"Rather, the market appears to be relatively well-balanced, which is reflected in an average house price growth rate that at 6.9 percent is not very far out of line with consumer inflation, translating into only mild growth in real terms."

While the price of township houses had shown growth, it should not be expected that all townships would in future become competition for suburban markets, Loos said.

- Fin24

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