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Wednesday Jul 02, 2014

South African informal settlements show tremendous growth

The 'formalisation' of property marketing in South Africa's major informal settlements is an on-going process, the impact of which is now being felt across the country.

The good news, says Tony Clarke of the Rawson Property Group, is that this is now also raising prices in these areas at an unprecedented rate and fostering a desire for home ownership among younger people.

In the major Cape Town suburbs of Khayelitsha and Gugulethu, average home prices, says Clarke, have risen very significantly in the last few years.

The following figures, says Clarke, have been taken from reports by the property analysts, Lightstone, who get their figures from the Deeds Office, and they are complemented by some equally interesting data regarding household incomes in the townships.

"In Khayelitsha the rise has been from an average of R36,000 in 2008 to R134,000 this year. In Gugulethu house prices have climbed steadily from an average of R157,000 in 2008 to R492,000 this year.

"In Johannesburg's Soweto we have also seen spectacular price rises, with certain homes selling for up to R2 million, R3 million and even R4 million. The average price here has risen from R181,000 in 2008 to R310,000 this year - which represents a 71,3% increase over six years."

"In Gugulethu the average household income ranges from R9,000 to R15,000," says Clarke. "In Khayelitsha the range is from R1,500 to R3,000 and in Soweto it is from R3,000 to R6,000. However Soweto, it is reported elsewhere, has a few millionaires and in this respect is way ahead of any other South African informal settlement."

What most of these suburbs have in common, says Clarke, is a tendency for homes to remain owned by one owner or one family for a very long time. For example, in Khayelitsha some 75% of the owners have held their property for over 11 years and the figures are much the same in the other major informal settlements, where an average of 80% of homes have been held by the same owner for over 11 years.

"This does indicate that trade in homes is not nearly as brisk and widespread as it is in the middle class suburbs. Here again, however, a big change has taken place. Today about 45% of new buyers are in the 18 to 35 year age group, whereas previously this figure was below 10%. It is worth noticing that the informal settlement figures are actually higher than those in most middle class areas, where some 60% of buyers still tend to be in the 30 to 45 year old group."

Clarke says that he anticipates a complete revolution in attitudes to home ownership among residence here, with more and more potential buyers realizing that a home is a good asset and one to be aimed at, even if it takes some sacrifice.

"We are definitely seeing changes in this direction in the areas that we serve," says Clarke, "especially in areas like Pretoria West, where the homes are largely bought by previously disadvantaged buyers."

Rawson Press Release


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