Sentiment for a bright future in housing market
This is even more surprising when considering other negative factors affecting economic growth, such as the recent increase in VAT, the persistent rise in petrol price and the unlikelihood of further interest rate cuts.
On the ground, although consumers are seeing a current tough economic climate there is sentiment of a bright future, especially where it concerns the property market. The market remains robust, particularly in the main metropoles where a younger demographic is seeing the value in owning property. Added to this is the financial sector's inclination to give bonds - another factor that is keeping the market buoyant and active.
According to Statistics SA, the North West has the cheapest construction costs in South Africa currently, while KwaZulu-Natal is the most expensive. The average building cost in the North West is R5060 a square metre, while construction costs in KwaZulu-Natal come in at R9610 a m2.
The second most affordable province is Limpopo, at R5270 a m2 followed by Mpumalanga at R5690 a m2. The second most expensive construction province is Gauteng, at R7 870 a m2 followed by the Western Cape at R7 020 a m2.
Interestingly, the province with the largest number of building plans approved in total square metres for the period January to July 2018 was the Western Cape, followed by Gauteng and then KwaZulu-Natal.
The costs of renovating a property will vary depending on the project at hand. However, in most instances it will be substantially lower than the cost of a new build. A fresh coat of paint and updated flooring may be at the lower end of the cost scale, while a new kitchen or bathroom coupled to knocking down and rebuilding walls will tend to the higher end.
While some areas are experiencing a sluggish growth period, there are others that are outperforming the rest with excellent growth and lucrative long-term investment opportunities.
The growth in residential property prices in Gauteng and KwaZulu-Natal has gradually rebounded after a number of slow years, with the East Rand showing the strongest recovery of the Gauteng metropolitan areas.
FNB’s estate agent survey shows that the Gauteng residential market remains the strong point in South Africa in terms of stability. Homes in Pretoria sell in just more than 11 weeks, compared to the national average of 16 weeks.
Significantly, Pretoria is the fastest-growing South African metro economy and is ranked 35th on a list of 300 of the world's biggest metro areas, according to Global Metro Monitor. Pretoria has surpassed both Johannesburg and Cape Town with a 7.6percent growth in employment and strong GDP per capita growth.
In Johannesburg and Pretoria the market is experiencing an upward trend in sales across all price ranges.
Gauteng is experiencing a rising demand for sectional title units, many of which have been developed with convenience in mind and they provide numerous amenities. They are also opportunely positioned for easy commute to work, school and retail. Locations such as the greater Fourways area, Midrand and Centurion continue to be sought-after as they are well-priced and present an excellent investment.
Whether renovating or investing in a new build, ensure that you are dealing with a professional and reputable company. New builds and renovations are valuable investments, and have the potential for considerable capital growth when the time comes to consider selling.
Craig Hutchison is the chief executive of Engel & Völkers Southern Africa.