South Africa’s housing market has shown a resilience in spite of a sluggish economy which fell into a technical recession in the second quarter, leading property group Pam Golding said.
Notwithstanding two quarters of negative growth, a weaker rand and external factors such as a brewing global trade war and rising oil prices, the housing market has seen some “bright sparks”, with the younger demographic eager to buy property and a financial sector with an appetite to extend mortgages, Pam Golding CEO Andrew Golding said.
“Economic growth is likely to continue to be sluggish for the balance of 2018 and although forecasts are for slightly stronger growth in 2019, this will take time to play itself out into the property market,” he said, adding that the local property market would generally remain tepid.
“(But) with a younger generation eager to enter the property market and an up-and-coming segment of the market which has newfound wealth and a desire to invest in real estate, we hope to see a gradually improving housing market.”
The Pam Golding report showed that some areas continued to outperform the market, including suburbs offering an alternative to congestion, a flourishing business hub, and easy access to good schools such as Claremont in Cape Town or Durban North and uMhlanga in KwaZulu-Natal province, as well as areas with access to good schools and work, but better value-for-money property such as Cape Town’s northern suburbs and green mixed-use developments such as Menlyn Maine in Pretoria.
House price inflation is diverging noticeably, with a slowdown seen in the Western Cape although it still outperforms the rest of the market.
In contrast, after slowing in recent years, growth in house prices in both Gauteng and KwaZulu-Natal provinces has been rebounding gradually since mid-2017, with the East Rand showing the strongest rebound of the three Gauteng metro areas.
“It is encouraging to see that the housing market in Gauteng is showing signs of recovery, particularly in the north and in Pretoria,” said Bradd Bendall, general manager for real estate operations at Pam Golding.
As the economic powerhouse of South Africa, Gauteng attracts many international business executives who may reside in the country on secondment for several years at a time, as well as buyers from the rest of the continent, Pam Golding said, citing areas such as Fourways, Sandton, Sandhurst, Hyde Park, and Houghton.
The rundown district of Hillbrow in Johannesburg is also seeing the construction of the first new residential block to be built in the area since the late 1980s with a 10-storey, 128-unit apartment block going up at an investment of some R40 million.
“This is no flash in the pan as savvy developers have been investing consistently in Johannesburg inner-city, refurbishing buildings and establishing neighbourhood improvement districts for several years,” said Pam Golding.
“When the economy rebounds, creating a modest income boost for workers, then this area is likely to be Joburg’s next developmental frontier for investors and city planners.”