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Thursday Jul 22, 2021

Property prices 'accelerate in all provinces'

House price growth continues to accelerate in all provinces, with Mpumalanga, North West and the Eastern Cape standing out as the top performers, because of the positive impact of low interest rates, according to mortgage bond origination group Betterbond.

After a year of record-low interest rates, buyers continue to make the most of the favourable lending environment.

"Initially, Betterbond experienced a significant uptick in first-home buyers, buoyed by the improved affordability. But what we are observing is that buyers across all price bands are seeing the value of buying a home now while the prime lending rate is at the lowest it has been in 55 years," Betterbond chief executive Carl Coetzee said yesterday.

According to Lightstone data to the end of May, the top-performing province was Mpumalanga, with house price growth of 8.1 percent, followed closely by the North West.

In the first quarter of last year, house price growth in North West was 0.7 percent. By February this year, it was a substantial 8 percent.

Similarly, the Eastern Cape had shown strong price growth of 7.4 percent. Nelson Mandela Bay was the top-performing metro at the end of February, with house price inflation of 8 percent, according to Lightstone.

"Remote working has affected buying patterns, with many homeowners looking for larger properties in areas that will offer a better quality of life. These properties are often not in the larger cities, which accounts for the strong price growth across provinces," said Coetzee.

House prices were well up from pre-pandemic levels, he said.

Pam Golding Properties senior research analyst Sandra Gordon said: "Since December 2019, Nelson Mandela Bay has outperformed relative to other metro housing markets. House prices rose by an average of 6.29 percent last year, which is almost double the increase in ethekwini (at 3.26 percent) - the second-strongest growth rate recorded last year, with robust growth in Nelson Mandela Bay house prices continuing into the new year."

Pam Golding Properties' area principal in Gqeberha, Justin Kreusch, said despite the lockdown for the 12 months from March last year to the end of February this year, "we've had our best financial year to date, both in terms of sales turnover and volumes, namely units sold. This is despite the fact that due to the Covid-19 regulations we couldn't trade during the latter part of March, April and May last year."

Coetzee said Lightstone's data for May showed that house price inflation has improved significantly for all provinces, except the Western Cape, compared with the first quarter last year. The Western Cape's price inflation, at 4.1 percent, was still below the 4.4 percent it was in January last year, and considerably less than the 9.7 percent in 2017.

"However, house prices in the Western Cape have traditionally been substantially higher than the rest of the country, and this dip in inflation reflects the necessary price correction that was already under way before the pandemic," said Coetzee. There were also fewer overseas buyers, because of travel restrictions.

However, the percentage of bond applications in the Western Cape for properties of more than R3 million had increased from just more than 5 percent in June last year to almost 11 percent for the year to date, said Coetzee.

Similarly, the percentage of mortgage bond applications for properties priced at more than R3m in Johannesburg North West was at almost 8 percent for the year to date, up from 5 percent in June last year.

"This shows that there is movement at the upper end of the market, and that the impact of the lower interest rates is now being felt across all price bands."

The average purchase price in the Northern Cape was up by 18 percent, while average prices in the Eastern Cape were up 12 percent. The average purchase price in Kwazulu-natal was up 9 percent over the 12 months to June.

The average house purchase price in Johannesburg North West increased by 8 percent, and by 10 percent in Johannesburg South East. This reflected Lightstone's observation that house price inflation in Gauteng had almost doubled in the past five years.

Daily News16 Jul 2021 EDWARD WEST edward.west-AT-inl.co-DOT-za

    
 

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