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Urbanisation boosts home prices in inner suburbs

Urbanisation and the growing demand for homes close to work, shops and schools are having a positive effect on property prices in many of the older, inner suburbs of Johannesburg and could help them recover from years of decline and decay.
 
That’s the word from Lew Geffen, chairman of Sotheby’s International Realty in SA, who says the company’s latest research shows that house prices in areas such as Berea, Orange Grove and Yeoville have risen by as much as 103% in the past year on the back of steep increases in the number of sales (see table below).
 
Deeds Office figures show that there were 124 sales of freehold properties in Orange Grove in the 12 months to end-February, for example, and 102 in Malvern, and this type of demand along with a dwindling supply of homes for sale has seen prices in several of these areas pass the R1m mark in the past year.
 
“Nevertheless, these are still some of the least expensive suburbs in Johannesburg in which to acquire a home that is close to the CBD and also provides easy access to some of the city’s best schools, colleges and universities, shops, medical facilities and the new public transport networks such as the Rea Vaya bus rapid transport system.”
 
“Through the Johannesburg Development Agency, the city is currently also spending some R50m to upgrade public amenities and precincts in these areas, such as the Patterson Park sports complex in Orange Grove and the library in Brixton, while private investors have already started to upgrade apartment buildings and their immediate surroundings.
 
“In fact we expect that as these inner suburbs continue to enjoy urban renewal over the next few years, in the manner of Auckland Park, Braamfontein and the Maboneng precinct in central Johannesburg, they will become increasingly trendy places for career singles, working couples and young families to live, work and play.”
 
As it is, he says, while the prices of freehold properties have risen, the prices of sectional title flats in suburbs such as Berea and Yeoville have shown hardly any growth over the past year, despite large numbers of sales, so now would be an excellent time for private buy-to-let investors to secure units here.
 
“Rental demand is solid, owing to the rapidly growing number of young people who want to live close to their workplaces around the city centre rather than commute from outlying areas, and the value of flats and buildings purchased now is set to increase substantially as the renewal of these areas proceeds.”

Freehold sales in inner suburbs2014/ 2015

Suburb

No sales to end-Feb 2015

12-month % increase

Average price (freehold)

12-month increase

Berea

33

65

R515 000

41

Brixton

60

28

R977 000

30

Malvern

102

38

R1,2m

40

Orange Grove

124

4

R1,6m

71

Triomf

51

31

R876 000

34

Yeoville

63

80

R1,6m

103

Source: Sotheby’s International Realty




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