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Wednesday Nov 23, 2016

'Housing market running out of steam'

Signs were now emerging that South Africa's housing market was beginning to lose some momentum in the face of persistent economic headwinds, said Pam Golding Property Group chief executive Andrew Golding.

This was after the residential property market had continued to exhibit extraordinary resilience and remained one of the few bright spots in an otherwise lacklustre economy, he said.

Golding attributed the strength of the housing market to the continued vibrancy of the country's major metro areas, coupled with a growing preference for property as an asset class at a time of extreme financial market volatility.

He said the Pam Golding residential property index reached a cyclical peak of 5.7 percent in March this year after registering an average inflation rate of 5.5 percent last year, but now appeared to be slowing.

Golding stressed that there were still several sectors within the local housing market that continued to flourish and register real growth rates. He cited the example of the 10.35 percent year-to-date growth in house price inflation in the Western Cape.

The outperformance of the Western Cape housing market relative to both Gauteng and KwaZulu-Natal began in mid2013, which almost coincided with the start of the emigration of buyers to the Cape.

Golding said a significant portion of buyers relocating to the Western Cape chose to settle in the greater Cape Town area, which with an average house price inflation of 11.9 percent during the first half of this year remained the top performing metro housing market in South Africa and almost 5 percent ahead of Durban, the second strongest metro housing market.

He said house price inflation in Gauteng had underperformed the national index in recent years because of the subdued economic environment.

Golding said a possible explanation for Gauteng's relative underperformance was that the region was better able to meet growing demand for new housing while Cape Town had geographic limits because of the coastline and mountains.

He said KwaZulu-Natal was experiencing a modest rebound with the growth in prices rising from 5.4 percent late last year to 7.5 percent in September, with demand particularly buoyant along the north coast.

Golding said the Eastern Cape housing market had lagged behind the other major regional markets in recent years, but its house inflation was gaining momentum as massive infrastructural and property investments in the region bolstered activity in the housing market.

Nelson Mandela Bay had registered average house inflation of 5.4 percent in the first half of this year, making it the third best performing metro area in South Africa.

The Pam Golding Property Group grew turnover by 2 percent to just over R13.5 billion in the first eight months of its financial year, on track to achieve turnover in excess of R20bn for the year to February. The bulk of the group's sales were in the price band up to R5m.

Business Report

 
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