The national housing market was undergoing a period of change in which Gauteng and KZN was replacing the Western Cape as the driver of the market. File Image: IOL
JOHANNESBURG - The  national housing market was undergoing a period of change in which Gauteng and KwaZulu-Natal was replacing the Western Cape as the driver of the market.

However, Pam Golding Property Group chief executive Andrew Golding stressed the Western Cape was still turning in an impressive performance.

Golding said house price inflation in the Western Cape continued to slow to 9.5 percent in September but was still rising at double the rate as the rest of South Africa while  KwaZulu-Natal’s house price inflation was at 4.27 percent and Gauteng at 2.83 percent .

He added that the areas of growth in the market were now also not necessarily the well-established high-end suburbs but currently the more affordable areas that were not out of reach of South Africa’s many less affluent buyers.

Golding said the percentage of freehold property transactions had declined nationally from almost 90 percent of all sales in 2003 to 67 percent this year, with the percentage of sectional title property transaction increased from 18 percent of total transaction in 2003 to 22 percent this year.  Sectional title property transactions in KwaZulu-Natal accounted for between 16 percent and 20 percent of total transaction, with no discernible trend, he said.

However, Golding said Amanzimtoti last year replaced Umhlanga as the most popular sectional title offering in KwaZulu-Natal, while residential estates were also becoming more popular in most towns across the province.

Last year 78 percent of all transactions in Amanzimtoti were sectional title properties compared to 71 percent in 2003 while the percentage of sectional title properties in Umhlanga dropped to 61 percent of total sales last year from 78 percent in 2003.

Golding said the average price of sectional title properties in KwaZulu-Natal was R940 485 this year, which represented an increase of 19.4 percent in the five years from 2013 and 58.5 percent appreciation in the past 10 years.

By contrast, the average price of a sectional title property in the Western Cape was R1.53 million and R805 906 in Gauteng.

The average price of sectional title properties in the Western Cape have increased by 56.3 percent in the past five years and by 87.03 percent in the past 10 years while those in Gauteng have risen by 11 percent in the past five years and 41.8 percent in the past 10 years.

Golding said KwaZulu-Natal appeared to be marginally losing market share, with total unit sales in the province declining to 11 percent of total national unit sales this year from about 13 percent in 2010.

However, Golding said coastal properties within 500 metres of the coastline continued to register a strengthening in house price inflation while the slowdown in non coastal house price inflation appeared to be bottoming out.

Golding said data was only available for the first half of this year but coastal properties registered an average increase in price of 7.9 percent year-on-year compared to just 4.3 percent for non coastal properties. 

He said residential estate sales rose from a low of 13 percent of total sales in late 2010 to a peak of 16.2 percent in August 2014 but since then slowed slightly faster than overall sales to a level of just over 15 percent early this year.

“It seems that in the current environment, estate sales are holding their own and are no longer accounting for a growing market share. It could perhaps reflect the growing preference for sectional title homes,” he said.

Golding added that KwaZulu-Natal was witnessing an influx of investors seeking property to let.

He said Durban was a great buy-to-let market because acquisition costs were low enough to make yields and gearing attractive while Umhlanga was also popular because both yields and capital appreciation were strong.

Turning to new developments, Golding said there was significant government spending planned in KwaZulu-Natal around the aerotropolis and a major exchange, which it was hoped would open up and revitalise the area, plus a new secure lifestyle precinct being developed in the Point area and private investment planned or underway in Umhlanga.

Golding said Johannesburg, Cape Town and Durban all had one thing in common in that each of these major metros had experienced burgeoning growth with the establishment of significant new nodes to the north of the cities, which was a trend that continued to gather momentum.

“In KwaZulu-Natal, the rapidly expanding North Coast region in close proximity to King Shaka International Airport, the proliferation of secure lifestyle estates, the North Coast areas from Umhlanga and Sibaya through to Ballito and Zimbali are increasingly in demand from home buyers from KwaZulu-Natal and other regions,” he said.