High demand for homes in secure lifestyle estates
Cape Town - There is continued high demand and capital growth in secure lifestyle estates in South Africa, Dr Andrew Golding, CEO of the Pam Golding Property (PGP) group said on Thursday.
About 2.5% of residential properties in South Africa are situated in such estates - 15% in terms of total value. Geographically about 50% of lifestyle estates are in Gauteng and 25% in the Western Cape.
The increased demand and capital growth is due to a growing number of buyers moving up into the higher-value markets, according to Golding.
"Estimates reflect around 318 000 residential properties within secure gated communities, with a combined value of R643bn at an average of R2m per property. This is almost three times more than the national average of R700 000 per home," said Golding.
On Baronetcy Estate in Cape Town's northern suburb of Plattekloof, the trend towards an estate lifestyle is increasingly evident, according to Golding, particularly among a younger age group from late 30s to early 50s. First time buyers also look to the northern suburbs in Cape Town, showing a preference for townhouse units in complexes, priced from around the R2.5m to R3.5m mark.
As for the housing market in general, he said PGP's view is that the South African housing market will likely continue to be resilient "in spite of the likelihood of the national economy continuing to flounder". The resilience in the market is underpinned, in his view, by the rapid growth in the SA population and the consequent housing demand, together with the ongoing shortage of new housing.
"In addition, a number of regional and suburban housing markets are likely to enjoy vibrant growth rates reflecting the migration of South Africans between provinces, the level of economic activity in the metro areas and the extent to which different metros are able to meet the housing demands of their local populations," said Golding.
Another factor influencing the local property market he pointed out, was the growing affluence in South Africa’s metro regions, even as growth in the national economy continues to lose momentum.
"This explains why house price inflation in major metros like Cape Town, Johannesburg and Pretoria continues to accelerate as these housing market benefits from growing populations, a relative shortage of housing and growing affluence within the metro population," said Golding.
According to PGP's Property Index, the top performing regional housing market is the Western Cape. Golding said factors like the province's large services sector, which at least partly insulates it from the slowdown in China’s commodity-heavy economy and a steady in-migration from other provinces, as well as the limited number of new housing units completed, impacts the housing market.
House price inflation in the Western Cape has averaged 8% year-to-date, well above the national average of 5.8%, while house prices in Cape Town continue to register double-digit growth rates - an average of 10.1% in the year to May. The Atlantic Seaboard in Cape Town even shows house price growth of around 25% for the past 12 months.
A trend in Cape Town currently is sellers divesting of large homes in the Southern Suburbs to relocate to the the Atlantic Seaboard. Cape Town’s central city property remains in high demand and short supply, while areas to watch, in Golding's view, are the Southern Peninsula’s Kalk Bay, Simon’s Town and Noordhoek, as well as Greenpoint, and the Western Seaboard where one can still acquire a house for just over R1m.
In KwaZulu-Natal house prices have been increasing by an average of 7.2% during the year-to-date, nearly 1.5% above the national average. The housing boom is located primarily on the North Coast, extending north of Durban through uMhanga, Ballito and further afield, rather than in the metro hub itself.
The relocation of King Shaka International Airport to the area, coupled with decentralisation of business nodes and schools as well as the proliferation of new up-market housing estates, has triggered a migration of families from elsewhere in the province and commuters from neighbouring regions, according to Golding.
House price inflation in Gauteng has averaged just 5.3% during the year-to-date – marginally below the national average.
"The underperformance of Gauteng’s housing market is at least partially attributable to the presence of several mining towns in the region, which have been hard hit by both the slump in global commodity prices and ongoing labour tensions," explained Golding.
Against a background of a muted economy, Johannesburg and Pretoria continue to develop at a rapid pace with growth being particularly evident across a number of growth nodes.
"This is resulting in rapid residential densification within growth nodes such as Rosebank, Midrand and Fourways. In addition, Johannesburg itself and Braamfontein are undergoing massive redevelopment while the growth of Sandton continues unabated," said Golding.
New residential apartment developments in and around central Sandton are currently selling for approximately R35 000 up to R60 000 per square metre, while PGP is marketing a penthouse at Michelangelo Towers in Sandown for R48.9m, or R85 500 per square metre. Centres such as Fourways and Menlyn are even being described as "new mini-Sandtons", while Midrand has doubled its number of residential properties.
"From a development perspective, a demand among more mature executives entering a new kind of ‘pre-retirement’ lifestage has prompted the launch of the new Kruinkloof Bushveld Estate, just 12km west of Sandton, offering the luxury of a bushveld home close to big-city amenities and where plots are selling from R700 000 and homes from R3.5m," said Golding.