The gap between new buildings and those that have already been lived in for some time has widened drastically in South Africa since 2009, says Bill Rawson, Chairman of the Rawson Property Group. This, he adds, is all the more remarkable because builders and developers have ‘bent over backwards’ in the last few years to reduce their price rises and in many cases have done so very efficiently.
“FNB’s Barometer for some of the less affluent areas in Cape Town shows that in 2009, the gap between new buildings and those that had already been lived in was only 3%. Nationally the figure was only 2%. However when the economic crunch hit in 2010, the gap rose rapidly to 23% for the less affluent Cape areas and 22% nationally. Today, the gap stands at 26% for Cape Town and 25% nationally.”
These figures, said Rawson, lend credibility to the statements often made by estate agents that secondhand home prices in South Africa are at levels which are significantly lower than those of the peak periods in the past, but these are unlikely to remain at these low levels for much longer.
“Already we are seeing a 1, 1% real growth in middle bracket housing, i.e. a rise of 6% in nominal terms - when inflation is allowed for, and a recent Lightstone analysis has indicated that these rises are likely to continue.
“Another FNB report has shown that nationally, average house prices are now well above R800,000 and are very close to early 2008 levels.”
In the more affluent areas such as Bryanston, Constantia and Kloof, added Rawson, Rawson Properties franchisees are beginning to report that demand for property is on the increase and prices are starting to move up at last.
Particularly encouraging are the figures from the FNB Barometer, said Rawson, which also show that in the less affluent Western Cape areas, the number of buyers in the 26 to 35 year old age group is rising and almost 35% of these are now first time home buyers.
“Traditionally, home owners in the Western Cape’s poorer areas have been 40 to 55 years old,” said Rawson. “This increase in young buyers, therefore, augers very well for the future.”
Asked if the gap between old and new homes did not make new developments more difficult to launch and sell, Rawson said,“speaking as Chairman of Rawson Developers and Homebuilders, which has four Rondebosch developments, all either sold out or selling well and has work in the pipeline for the next three years, I can say that new developments are still sought after if they are in the areas in which people have always wanted to live and if their units are small and compact and therefore more affordable. This of course means that today’s developments are very definitely slanted towards sectional title, but a number of surveys have shown that young people and retirees increasingly enjoy and appreciate this type of communal living, especially if it is accompanied by facilities such as outdoor entertainment areas, swimming pools and gyms. The trend towards including these in such developments is, therefore, likely to increase.”
