Roy Cokayne
THE median transaction prices of Reconstruction and Development Programme (RDP) houses and other forms of subsidised properties in Soweto have increased by more than 500 percent in the past few years, while non-subsidised house transaction prices have increased by about 300 percent, according to Lightstone.
This is in stark contrast to the single-digit house price growth over the past few years in the middle segment of the residential property market, which comprises houses between 80m2 and 400m2 and priced up to R3.8 million.
However, Lightstone, a provider of comprehensive data, analytics and systems on automotive, property and business assets, stressed the discrepancy in price growth between these types of properties should even out in time because the price of RDP housing and other forms of subsidised properties had been growing from a lower base.
It added that while townships were still primarily considered to be areas of low-cost housing and government-provided housing, some suburbs within these areas were starting to resemble the rest of the South African property market.
It said more than 11 million property transactions had occurred in the country’s property market since 1994, of which more than 2 million had occurred in areas that had traditionally been referred to as townships.
Lightstone said there was a clear distinction in the frequency of yearly transactions in townships, as well as a changing relationship between transferor and transferee as the economy evolved.
It said the majority of transaction activity in the township property market occurred between 1997 and 2003, with more than 55 percent happening in this period.
Lightstone said the majority of township property transactions had taken place in Soweto. In the past decade these had largely been between private individuals, resulting in Soweto leading the increase in the market value of township properties. Many property transfers in other townships were from government and local authorities to private individuals, resulting in the average transfer prices sometimes being very low.
It said the average transaction value of most properties in Soweto that were sold by private individuals between 2000 and 2004 was below R100 000, but this had increased dramatically across the different types of properties since 2009.
It added that of all the transactions taking place in townships between 1997 and 2003, 43 percent were properties that transacted for the first time and 34 percent were transfers from the local authorities to private individuals and institutions.
But Lightstone said that this trend had changed radically during the US subprime crisis in 2007, with the proportion of first-time transactions reducing to 6 percent.
However, Lightstone said township housing activity did not come to a grinding halt during this period, with the percentage of private individuals selling their properties increasing in 2008 to its highest level yet at 43 percent of all activity from 10 percent in 2003.
Lightstone said the degree of involvement by the government and local authorities in these transactions was somewhat foreign to the rest of the property market, with less than 20 percent of all the properties transferred in 1994 by government to other market players.
Although this figure was almost twice as high in townships, it did not necessarily imply that ownership had remained in the hands of the government and local authorities, it said.
Lightstone said 66 percent of all property transactions that had taken place since 1994 had been transfers to private individuals and this rose to more than 75 percent after the US subprime crisis.