Johannesburg – The number of show-house visitors in leafy, expensive areas dropped sharply in fourth quarter 2007, according to the latest data from First National Bank (FNB).
Activity levels in upper-income areas have slumped to such an extent that it now takes up to four months to sell houses priced at more than R1m, says FNB Home Loans CEO Jan Kleynhans. That’s up from an average two-month selling period a year ago.
FNB’s fourth quarter 2007 property barometer, released earlier on Monday, shows that the number of potential buyers visiting show-houses across SA’s major cities (all price classes) dropped by 16% on an annualised basis in the fourth quarter of 2007.
However, the decline in ‘feet through doors’ was most pronounced in suburbs priced between R1.5m and R2.5m.
‘Tough times for pricey suburbs’
Kleynhans says there’s no doubt that upper-priced suburbs are experiencing tougher times than their cheaper counterparts.
House-price growth in what FNB rates as premium-priced suburbs (R1m plus) has already slowed to less than 10% in most cities.
Kleynhans says it’s not unlikely that by year-end, prices at this end of the market could show no growth or even drop.
He expects house price growth in the mid-market priced between R600 000 and R1m to slow to around 5% by year-end, down from an average 14% in fourth quarter 2007.
Townships buck slow-growth trend
However, township property markets appear to be bucking the general trend with no sign yet of a drop in housing activity.
In fact, FNB data shows that a number of townships across SA still recorded house growth of more than 40% in fourth quarter 2007.
In Gauteng, these include Tsakane (56%), Mamelodi (48%), Soshanguve (44%), Kathlehong (41%) and Vosloorus (40%). Khayelitsha in Cape Town recorded a whopping 57% increase in price in the fourth quarter of 2007 while the Durban townships of Kwa-Mashu and Umlazi saw house prices surge by 55% and 48% respectively.
But FNB property strategist John Loos expects the growth gap between townships and former white suburbs to narrow significantly over the next 12 months, as township affordability levels also start to deteriorate.
Authored By: Joan Muller
Published By: Fin24