SA's fastest rising house price cities

House prices in the cities of Cape Town and Johannesburg have shown the steadiest increase of all the major metropolitan areas in the country since the turn-around from negative growth in the second quarter of 2009. This is according to the latest house price index released by property research group Lightstone. The index (recorded until March 2010) also shows that properties in the ‘affordable' band are performing well above other bands like the ‘luxury' and ‘mid value' bands.

Although Johannesburg has led the pack in annualised month to month house price inflation for 2010, the city's figures took a dip from 8.7% in January and 9.2% in February to 8.6% in March. Cape Town however did not see the same reversal. Figures for the Mother City were 7.7% in January, 8.8% in February and 9.0% in March 2010. In the February/March period figures for the rest of the metros remained flat, accept for eThekwini which rose from 5.4% to 5.5%. The Nelson Mandela Metro fared the worst over this period declining from 2.0% to 0.8%.

Property price inflation also increased steadily for both coastal and non-coastal properties since the 2009 turnaround began, although it seems that the rate of inflation is starting to decrease for non-coastal properties. These figures were 7.4% in January, 8.2% in February and 8.4% in March 2010. Coastal properties on the other hand have retained a steadier pace of increase for 2010 at 4.5% in January, 5.3% in February and 7.4% in March.

Lightstone CEO Anthony Miller warned that the month-to-month data sets for February and March should not be seen in isolation and that they could contain data anomalies owing to various factors.

Freehold properties have also outperformed their sectional title counterparts. Freehold property inflation was 7.9% for January, 9.0% for February and 10% for March this year, whereas sectional properties have shown a decline from a flat 7.1% in January and February to 6.8% in March.

According to the Lightstone data, the most lucrative sector remains the mid and affordable bands. Inflation in the affordable band rose from 10.9% in January, to 14.3%, but declined sharply to 12.6% in March this year. In the mid-sector figures were 8.3% in January, 9.1% in February and 9.3% in March, compared to the luxury and high value sectors which showed increases of 7.3-8.0% and 7.2-8.0% respectively.

FNB Property Strategist John Loos says their Estate Agents Survey shows that Cape Town was indeed the city with the strongest demand in the 1st quarter of 2010, but that the rate of decline in inflation was quicker for Cape Town than Johannesburg during the 2nd quarter of the year. Loos also confirmed that the Nelson Mandela metro was their weakest performer during the 1st quarter, mainly because industrialised cities were worst hit by the recession.

Loos was however, surprised by the sharp decline in the affordable price band shown by the Lightstone data and says that their figures don't correspond. He added that their coastal figures were also somewhat different and showed much weaker performance. "They [Lightstone] measure their coastal properties as properties within 500 metres from the shoreline. We measure whole coastal towns and our data definitely showed year-on-year deflation in the first quarter of this year."

Lightstone's Anthony Miller confirmed the differences in data capturing methods for coastal properties and said that he would like to see another month or two's data before drawing any conclusions on the coastal property market or any other trends for that matter. According to Miller, an early speculative conclusion may be that "there is a recognition that the market has largely bottomed out and that people who have capital are looking to buy bargain holiday properties".

Article by: Leoni Kok -