PROPERTY: Cape Performs Above Average
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The latest ABSA Home Loans Review shows clearly that those who have been talking down the prospects for the South African residential sector are ignoring much positive data, says Mike Greeff, Chief Executive of Greeff Properties.
“Year-on-year the South African figures for the second quarters of 2007 and 2008 show that all residential home categories achieved reasonable growth rates,” said Greeff. “In the affordable category, the year-on-year price growth was 12,1%. In mid-segment housing the growth was 4,7% and in the luxury category 8,8%. Two of the three categories, therefore, kept ahead of the average inflation rate over the last year and the mid-segment was only 2% below it. This, in my view, is hardly the property recession that the doom and gloom prophets have said has overtaken us. Let us face it: property is the place to be now. For many years it has been a very stable growth investment – and the latest figures show that this will continue. As ABSA has commented, homeowners who bought three to ten years ago are still realising appreciable capital gains if they decide to sell.”
ABSA, said Greeff, are forecasting a 10% growth across all property bands by 2010.
Analysing the ABSA figures further, Greeff said that the Western Cape was one of only four South African provinces to achieve year-on-year price rises in the second quarter of 2008, when there were significant drops in home values in such key areas as Gauteng, Eastern Province and KwaZulu Natal. The increase in the Western Cape prices in that quarter was, in fact, 6,9%. Properties in the southern suburbs, Greeff’s area of specialisation, have, he said, held up even better than this as demand still outstrips supply here – and will do so for a very long time still.
Also evident from the ABSA Review, said Greeff, is the fact that it is now almost invariably better to buy than to build, the reason for this being that the average price of building a new home in South Africa rose year-on-year by 16,7%.
“This is a trend that we have warned about previously,” said Greeff, “but the good news is that the major developers, including several for whom we work, have been more successful than the smaller operators in containing cost rises, with the result that multi-unit projects can still offer buyers very good value.”
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