South African house price growth slowed in September and growth is expected to remain in low single digits in nominal terms into 2012.

According to the Standard Bank Property Insight research report for October, growth in real terms remains negative.

The Standard Bank’s median house price recorded growth of 0.6 percent year-on-year (y/y) in September from 1.6 percent y/y in August.

Research analyst for Standard Bank Home Loans, Sibusiso Gumbi says the house price growth runs parallel with the weakening South African economy.

GDP growth slowed to 1.3 percent in Q2 2011 from 4.5 percent in the first quarter.

Gumbi says growth in mortgage advances declined to 1.6 percent y/y in August from 0.3 percent y/y in July.

He explains that building activity remains subdued, with house price growth likely to follow suit.

The value of residential buildings completed (in real terms) for the period January to July 2011 fell by 7.4 percent from the corresponding period in 2010.

Standard Bank has revised its estimates for GDP growth to 3.3 percent y/y (previously 3.8 percent y/y) for 2011 and 3.1 percent y/y (previously 3.4 percent y/y) for 2012.

PGP is currently marketing a Stefan Antoni designed mansion in Bryanston for R65 million. It is set on an erf of 4000 square metres.

Despite this trend in slowing house price growth, Gauteng luxury home buyers are reportedly back in the market and showing interest in prime properties with an emphasis on sound value for money.

According to Pam Golding Properties (PGP), in July and August, the group achieved a number of big ticket sales in Johannesburg’s affluent northern suburbs of Bryanston, Westcliff, Melrose Arch, Houghton Estate and Sandhurst.’

These homes were sold for between R16 million and R35 million reinforcing the fact that Gauteng remains the country’s powerhouse and property investment location according to the FNB Property Barometer Q3 2011 Provincial House Price Indices.

The report revealed that Gauteng recorded little house price deflation during the 2009 period of national house price decline compared to the Western Cape, Eastern Cape and KwaZulu-Natal.

PGP says in the past 18 months, at least 25 percent of all Johannesburg northern suburbs sales of luxury homes are priced from R15 million.

This inspiring architect-designed home of approximately 1830 square metres in Bryanston, Johannesburg was sold by Pam Golding Properties for R30 million.

The highest priced property sold by PGP was a home in Westcliff which sold for R35 million, followed by a house in Bryanston for R30 million, Sandhurst for R23.68 million and another for R16.3 million, a home in Houghton Estate for R16 million and an apartment in Melrose Arch for R22.2 million.

Jonathan Davies and Rupert Finnemore, joint area managers for PGP Hyde Park say buyers seeking luxury homes are mostly local purchasers, those relocating back to Gauteng from the Cape Town and others from African countries such as Kenya, Nigeria and Zimbabwe.

“Our buyers are mostly individuals purchasing a primary residence, with some corporate buyers,” says Davies.

There is a growing trend towards ‘new money’ or recently acquired wealth flowing into the market through those wanting to acquire residential property at the ‘best’ address available, he explains.

Davies says location remains key and a prime Hyde Park or Sandhurst address remains highly sought after. Buyers are also finding value in the upmarket area of Bryanston, centrally situated in regard to the Sandton CBD.

Finnemore adds that the top end of the market remains sustainable due to its resilience as sellers are in a position to sit out any downturn in the market. As a result, properties tend to maintain value despite challenging market conditions and buyers can afford to provide a high cash to loan ratio. – Denise Mhlanga

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