Real Estate Agents: Property boom hits South African townships

Home owners in the townships are realizing their asking prices when they sell their houses, with the price standing at R223 000.

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An estimated 94 percent of estate agents believe that homeowners in the townships are realizing their asking prices when they sell their houses, with the average price standing at R223 000, a trend suggesting the residential property boom is moving into the townships.

Ed Grondel, the chief executive of FNB Home Loans, said yesterday that this could be attributed to the more realistic prices that were being asked in this market and to high demand.

The overall activity level of the FNB Residential Property Barometer showed a score of 5.8 in the fourth quarter of last year, but activity in new developments in the townships was much higher at 7.5.

Grondel said about 75 percent of township buyers were first-time entrants to the market. Of those, 51 percent were women. Affordability levels were good. The township market was almost exclusively a buy-to-live market, with the average price at R223 000.

This information was based on a survey of the perceptions and expectations of 100 real estate professionals operating in new development markets in Gauteng townships, including Soweto, Tembisa, Daveyton, Atteridgeville, Sebokeng and Kagiso. Grondel said Daveyton, with growth of 66 percent, had registered the largest price growth between the fourth quarter of 2004 and the same quarter last year. It was followed by Tembisa at 65 percent and Soweto at 54 percent.

He added that 55 percent of respondents to the survey stated that activity was higher than a year ago and 68 percent were anticipating a further increase. "This high level and optimistic outlook is attributed to high levels of demand. Property in these areas is seen as an increasingly desirable investment and young people, in particular, are keen to own their own homes and gain independence.

Turning to the metropolitan areas, Grondel said one of the four headline trends revealed by the latest FNB Residential Property Barometer was that 53 percent of sellers were not realising their asking price, compared with 47 percent a year ago.

The length of time property remained on the market had declined to seven weeks in the fourth quarter of last year from eight weeks in the third quarter; the outlook for the first quarter of 2006 remained upbeat; and estate agents believed the market would continue to "stabilise for the foreseeable future".

He said a contributing factor to the decline in the average number of weeks a property remained on the market could be the more realistic prices being asked by sellers.

Source: Business Report 25 January 2006
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