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More flats and fewer houses being built

15 Nov 2017

South Africa's economy may be making property ownership a little harder to achieve, but statistics reveal that more than 50 000 homes were purchased from July to September.

Furthermore, 36 740 bonds were registered at the Deeds Office during this period, totalling almost R39 billion. The average bond amount was R1.1 million. This is according to Re/Max's Q3 National Housing Report, which also states that of the 52 011 homes bought, 6 562 were first-time registrations.

In the report Adrian Goslett, regional director and chief executive Re/ Max Southern Africa, says the average price of a sectional title home has increased by 4% this year.

By comparison, the average price of a freehold property has remained stagnant. Statistics from Lightstone reveal that currently, the national median price of a freehold property is at R1.087m, with the national median price of a sectional title unit at R954 662.

"The deceleration in freehold house price growth can be attributed to poor economic growth, continued political uncertainty and subdued business and consumer confidence. Due to high demand for sectional title units and the current lack of inventory, these types of properties have been less affected by economic conditions. So far this year, 87 935 freehold properties and 45 438 sectional title homes have been sold countrywide."

Goslett forecasts the supply of inventory to the market will continue to remain constrained with building activity subdued, which should aid property pricing to some degree. Stats SA data shows that from January this year to July, only 22 900 residential homes were built.

During what many consider to be the peak of the property boom in 2007, nearly double the number of homes were constructed during the same period.

While general building activity has slowed, by category, there has been a marked increase in the construction of flats and townhouses, as well as small houses measuring less than 80m2. Conversely, the construction of large homes has halved from 2016.

Goslett says affordable housing was still the front-runner in Q3, with homes priced below R400 000 continuing to outsell other price brackets. About a third (30.35%) of homes sold in South Africa between July and September 2017 fall within this price range.

"I have little doubt the affordable housing market will continue to outshine other pricing categories, given the majority of the population fall into this sector of the market."

According to the report, 24.54% of homes sold from July to September were priced R400 000 to R800 000, while those priced from R800 000 to R1.5m made up 24.3% of the country's home sales during the same period. Homes priced from R1.5m to R3m represented a 15.19% share of the market, and properties priced over R3m accounted for just 5.62%.

New research by Lightstone has revealed that the 6.5 million registered residential properties in South Africa are valued at a total of R5 trillion. Of the total registered residential properties, freehold homes account for 69.7%, estates for 15.5% and sectional title homes for 14.8%.

Although Gauteng is the smallest province, Lightstone says it is home to the biggest portion of total properties in value and volume. The Western Cape is second and KwaZuluNatal third.

"Gauteng and the Western Cape include more than half of all the number of properties and two thirds of the total value. As the biggest province, the Northern Cape is still the least developed residential province with less than 1.3% of the total value of residential properties."

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