Property in former townships performing well

First National Bank (FNB) said on Tuesday that property in areas formerly classified as black townships, has outperformed former white suburbs in price growth since 2006.

John Loos, household strategist at FNB, had said that in the third quarter of 2013, FNB’s former black township house price index for major regions rose by 6.9% year-on-year.

Loos further added that this percentage is “slightly higher than the 5.2% revised growth for the previous quarter, and mildly higher than the 5.8 percent recorded for the entire market in the six major metros (Ethekwini, Cape Town, Nelson Mandela Bay, Ekurhuleni, Johannesburg and Tshwane).” 

Former black townships markets showed similar patterns to higher priced former white suburban markets, however they were more sensitive to interest rates and economic cycles.

Loos said that there was enough supply to cover the demand for houses in the former black townships, taking in account those who could afford to buy homes.

“Rather, the market appears to be relatively well-balanced, which is reflected in an average house price growth rate that at 6.9 percent is not very far out of line with consumer inflation, translating into only mild growth in real terms.”

While the price of township houses had shown growth, it should not be expected that all townships would in future become competition for suburban markets, Loos said.


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