It appears that house price growth is becoming increasingly location-driven with the gap between the best and worst performing areas widening markedly in recent months.

While latest housing data from banks and other industry players place average house price growth currently at around 8% to 10%, a more detailed breakdown of figures show that some areas are still racing ahead at 50% (most notably townships), while others are showing hardly any growth at all.

According to FNB's Residential Property Barometer for fourth quarter 2007 a number of townships across SA still recorded house price growth of more than 40% year-on-year (y-o-y).

In Gauteng, these include Tsakane (56%), Mamelodi (48%), Soshanguve (44%), Kathlehong (41%) and Vosloorus (40%). Khayelitsha in Cape Town recorded a hefty 57% price growth in fourth quarter 2007 while the Durban townships of Kwa-Mashu and Umlazi saw house prices surge by 55% and 48% respectively.

There were a number of traditional white suburbs across SA's major cities that were still recording growth of between 20% and 30%. These include Edenvale (Johannesburg), Brakpan (East Rand), Simon's Town (Cape Town) and Melkbosstrand (Cape Town).

Some of the smaller towns are also still seeing robust growth. For instance, house prices in Parys in the Free State were up 31% in fourth quarter 2007, followed by Queenstown (30%), Phalaborwa (26%), Grahamstown (25%) and Knysna (15%).

At the bottom of the growth performance stakes are areas like Somerset-West with growth of only 3% in fourth quarter 2007. Pinetown was up around 6% over the same period while Durbanville recorded 7%.

FNB property strategist John Loos says the performance of former townships is to be expected given the shortage of housing stock in more affordable areas, as well as steady demand growth from new entrants to the labour market that join the property ladder near the bottom. It appears that the strong performance of smaller towns are due to a lagged response to the boom which started earlier in major cities.

A quick search on Property24's Sold Price Index (PropertySPI) confirms that there is now a wide discrepancy in house price growth rates for different suburbs. For instance, in Johannesburg's swanky Sandhurst prices fell by 8,5% in 2007 (y-o-y) while equally posh golf estate Dainfern saw prices rise 25% over the same period.

That compares to more pedestrian growth of 7% and 14% in Johannesburg's mid to upper-end suburbs of Douglasdale and Melville respectively. - Joan Muller

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