25 January 2006
While the recent boom in South Africa’s traditional residential property market is slowly deflating, there’s a sharp rise in demand for houses in the country’s townships, Business Day reports.
Townships were the legislated residential areas for urban black people during the apartheid era, and generally retain this demographic. Despite a common misperception that they are poverty-stricken and riddled with crime, townships are becoming the new big thing for property.
According to Business day, analysts have identified more affordable housing and an emerging black middle class as drivers of this market.
The newspaper cites the fourth-quarter 2005 results of the First National Bank (FNB) Residential Property Barometer, which found that the confidence level in townships was 7.5 compared with 5.8 in traditionally white suburbs.
The barometer represents the perceptions of real estate professionals in the residential property market and measures activity levels on a scale of one to 10.
The one to three level is called “not very active”, while four to six is considered “stable”. Level seven to eight shows an “active” market, while nine to 10 is “very active”.
In its fourth quarter of 2005 research, FNB surveyed 100 real estate professionals operating in the townships of Soweto and in Tembisa, Daveyton and Vosloorus on the East Rand, in Midrand and in Atteridgeville (Tshwane), Sebokeng (south of Johannesburg) and Kagiso on the West Rand.
FNB home loans CEO Ed Grondel told Business Day that there was pent-up demand for residential property in the Gauteng township market, with seven buyers for every home for sale.
Roland Lange, executive head of sales and marketing for FNB home loans, said prices were affordable in the townships and that township living was considered more “trendy” than life in traditional residential areas.
Grondel said 55% of respondents said activity in the township market was higher than a year ago and 68% anticipated a further increase in activity, according to Business Day.
The average township property price was R223 000, and the most dominant buyers’ group those aged 25 to 35. Nurses, teachers, social workers and police officers were the dominant home buyers, accounting for 32% of the market.