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Township property prices outpace suburbs

August 10, 2013

The areas formerly classified as “black areas” under apartheid have outperformed the former white “suburbs” in terms of house price growth. That’s according to an First National Bank (FNB) index.

FNB’s household and consumer strategist, John Loos says the FNB former black township house price index for major metro
regions rose by 8.4% year-on-year in the first quarter of 2013.

“This was mildly higher than the 6.3% recorded for the entire market in the six major metros:  Ethekwini, Cape Town, Nelson Mandela Bay, Ekurhuleni, Joburg, and Tshwane.”

Loos says this growth also represents an improvement on the first quarter’s 5.7% for township regions.

Around the 2008/9 recession and interest peak, the index saw a significant deflation, reaching a 15.1% year-on-year decline in the second quarter of 2009, compared to the metros’ 4.5% decline.

Loos says however, when the market has periods of strengthening, such as in 2009/2010 one also saw the township house price growth rate rebounding more impressively than the overall market off a low base.   

“Therefore, we should perhaps expect the township house price growth rate to mildly outperform the rest in the near term, with the residential market going through a relatively good patch, with interest rates low and access to credit for entry-level buyers good.”

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