Thursday, June 21

Buy cheap or coastal

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The price growth rates for houses valued below R250000 and ones located on the coast are the highest

If you are considering buying a home based on current rates of price growth, your best bet is o the coast or a property that costs less than R250 000.

The latest Lightstone figures show the price inflation of homes in these categories are far outpacing the rest. Lightstone’s Residential Property Index also shows national house prices are growing by 3.85% annually.

Lightstone also compares the rates of coastal properties – those located within enumerator areas 500m of the coastline – and those further inland.

Findings show coastal homes recorded annual growth rates of 7.7% compared to inland properties with rates of 5%.

The provincial inflation rates are:

  • Western Cape – 8.5%.
  • Eastern Cape – 6.8%.
  • Free State – 3.3%
  • KwaZulu-Natal – 2.7%
  • Mpumalanga – 2.5%
  • Limpopo – 3.1%
  • Gauteng – 4%
  • North West – 3.7%

When comparing growth rates of municipalities, Lightstone says: “The inland municipalities of Ekurhuleni, City of Tshwane, and City of Johannesburg metros are growing stably at rates between 3% and 6% whereas the coastal municipalities are generally performing above this range.”

The annual rates for these inland municipalities at the end of January are 3.4% for Ekurhuleni, 5.4% for Tshwane, and 3.3% for Joburg. On the coast, the Cape Town’s annual price growth was 10.3% at the end of January while eThekwini’s was only 2.7%.

Sectional title vs full title: At the end of April, sectional title inflation was 4.1%, while the full title growth rate was 3.1%.

Inflation based on property value: Owners of homes classified as low value have reason to be pleased, with price inflation rates far outpacing those of higher value properties.

According to Lightstone: “Both the low value and mid value wealth segments continue to buck the trend by growing at more than 6% annually while the high and luxury wealth segments are inflating at rates below 4%.”

The value bands are classified as:

  1. Luxury: more than R1.5million.
  2. High: R700000 to R1.5m.
  3. Mid: R250000 to R700 000.
  4. Low: under R250 000.

The index shows homes classified as luxury have recorded annual price increases of only 0.4% as at the end of April, while high-value homes have seen increases of 3.1%. While mid-value homes recorded annual price growth of 6.7%, owners of low-value homes are being rewarded with price growth of 26.8%.

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