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Cape Town - Gauteng attracts the majority of South Africa’s first-time home buyers and this provides a solid underpinning for the housing market in the province, according to Dr Andrew Golding, chief executive of the Pam Golding Property Group (PGP).
He pointed out that, even though the tough economic climate is taking its toll on household finances, first-time buyers remain a significant presence in the South African housing market. Many of them move to Gauteng in search of economic opportunities at the early stages of their careers.
"Given SA’s relatively young population profile, demand from the growing number of first-time buyers will continue to provide a positive fundamental underpinning for the South African housing market for the foreseeable future," said Golding.
"It is this robust demand from first-time buyers which helps to explain the continued strong price performance of the lower price band (below R1m) housing market in all three major regional markets."
The dominant role of first-time buyers is also providing a key driver in the rapid transformation of SA’s housing market, he said. During the third quarter of 2016, for instance, 61% of all ooba’s applications were from black home buyers, while among first-time buyers this rose to 73% of all applications received by the bond originator.
READ: Property sector a catalyst for growth - expert
House price inflation
Golding said house price inflation in Gauteng has however underperformed the national index in recent years, as the subdued economic environment takes its toll on SA’s industrial heartland.
However, despite the relative underperformance of the overall Gauteng housing market, it is still SA's economic power-house and home to half of the country’s high net worth individuals.
"One possible explanation for Gauteng’s relative price underperformance is the fact that the region is better able to meet growing demand for new housing.
"Unlike Cape Town, where the geographic limits created by the coastline and mountains hamper the creation of new housing stock, creating a persistent shortage of stock in prime areas, Gauteng has been able to expand outwards in order to meet housing demand," explained Golding.
There are currently several major infrastructural, commercial and residential developments in what he called growth nodes such as Fourways, Midrand and Menlyn in Pretoria East. PGP also continues to see high levels of investment and growth in Sandton.
"Secure estates such as Steyn City and Dainfern remain resilient and popular even in tougher trading conditions, while we are noting an increase in the number of renovations and rebuilds in some of the more established estates. With its convenient airport access, avoiding considerable traffic congestion, Lanseria is experiencing significant land sales," added Golding.
According to Seeff Properties great areas in Gauteng to invest include the bohemian artist enclave of Melville, which is particularly popular with professionals.
Chris Hajec, Seeff’s managing director in Randburg said homes in Melville generally range from R1.4m to R3m, but even more affordable property can also be found in the directly adjacent Westdene.
Charles Vining, Seeff’s managing director in Sandton, said properties priced under R2m in Sandton and surrounds are most sought after and tend to move the quickest.
“While property in the sub R2m price range in Sandton usually fall into sectional title and are popular among investors or first time buyers, freestanding properties at this price can be obtained in a suburb like Paulshof. Clusters and houses in Paulshof, seen as a hot commodity, usually sell at between R1.8m and R2.6m,” said Vining.
In the upmarket suburb of Bedfordview prices range from R500 000 for a bachelor pad to upwards of R30m for palatial residences.
Other areas mentioned by Seeff include Eco Park in Centurion and Meyersdal in Johannesburg South.
READ: Gauteng leads the way in house price slowdown
Gautrain extension
Golding said the planned extension of the Gautrain is likely to have a significant impact on the housing market in several Gauteng suburbs in the year ahead.
"The Sandton and Rosebank Gautrain stations have very clearly boosted the development impetus in these suburbs. Companies are often willing to pay a premium for premises near a Gautrain station, while residents are attracted by the transport alternative the service offers to Gauteng’s congested highways," he said.
The Gautrain Management Agency is planning to extend the rail route by 150km and the Gautrain could soon extend its travelling routes to Soweto, Mamelodi and the West of Johannesburg.
"It is anticipated that the extension to the west of Johannesburg will have a similar impact on the local property market as was experienced in Sandton and Rosebank, with some big corporates opting to relocate there. Construction on the new lines could start in five years’ time," said Golding.
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