| Land prices, which account for about 30 to 40% of house prices, are
going to be the main factor that will support property prices, argues
Jacques du Toit, Absa's property economist in the bank's quarterly report.
On a house of R1,5-m, 40% (about R600 000) of this relates to the price
of land.
The report says in line with the booming residential market over the
past five years, the nominal price of residential land in SA also increased
sharply from an average of R67 700 per stand in the first quarter of
2000 to around R240 000 in the second quarter of 2005.
Du Toit notes that this was an increase of 250% in total, or 25% per
annum over this period. "In real terms, this came to growth of
168% in total or 19% per annum," adds Du Toit.
He also notes that in the second quarter of 2005, nominal growth in
residential land prices was 39% year-on-year after reaching a peak of
46% in the third of last year.
"Suitably and properly serviced for residential development has
become scarce, particularly in the rapidly growing metropolitan areas
of the country," says Du toit. "This has probably contributed
to the strong growth in land and property prices during the past few
years."
He warns that with the robust demand for housing, particularly in urban
areas, land price increases will not abate. As a result property prices
generally should be underpinned.
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Newsletter:
3 February 2012 to 10 February 2012 - Krugersdorp, Gauteng, South Africa
