Real Estate News - South Africa, Property boom in former black townships

JOHANNESBURG, 26 January (IRIN) - More money in the pockets of middle- to low-income earners has created a property boom in South Africa's former black townships, according to a new survey.

The 2005 Residential Property Barometer shows more property sales in townships like Soweto and Daveyton in Gauteng province, compared to the former white suburbs in the metropolitan areas of Johannesburg and Pretoria. The barometer is based on a survey of the perceptions and expectations of 100 real estate professionals operating in new development markets in Gauteng townships, conducted by the First National Bank (FNB).

About 55 percent of estate agents said the level of activity was higher than a year ago, while 68 percent anticipated further growth. The survey found that demand was outstripping supply and new developments "are not keeping up."

FNB economist John Loos cited a combination of reasons for the township property boom. Firstly, middle- to low-income earners with jobs in the formerly white suburbs have sought to buy property closer to their place of work, "which are often not affordable, so they have started looking for properties in the former black townships, like Soweto, affecting the demand for property in the area".

The survey found that over 50 percent of properties in the former black townships sold within three weeks of being listed. FNB has also been keeping track of the property market through their home loans department, finding that 75 percent of township buyers were first-time entrants to the market, of which 51 percent were women.

Most property owners in the townships were young - in the age group 25 to 35 years - and mainly nurses, teachers, social workers, police personnel or employed in the private sector. Significantly, on Wednesday the labour department announced a 5.6 percent minimum wage increase for retail workers in urban areas, which is likely to spur an increase in sales.

Loos pointed out that new commercial developments anticipated in townships, such as shopping malls, business complexes and even a golf estate in Soweto, which would make it a multi-use suburb, were other factors encouraging low-income earners to invest in property.

"Many retail workers live in Soweto, which has always been residential, and work in malls in the former white suburbs," he noted. "With the new commercial developments in the townships, given time, these will become what the former white suburbs are."

Article from: www.alertnet.org