New data collated by Lightstone has revealed that residential property market in traditional townships are showing many signs of maturing, with repeat sales of properties outstripping new property sales, leading to a consequent increase in the market value of township properties.
According to Paul-Roux De Kock at Lightstone, a provider of comprehensive data, analytics and systems on property, automotive and business assets, of the total percentage of sales in township areas in 2013, 60% were repeat sales compared with just 10% in 1997. “This data paints a very positive picture of the residential township market, indicating an increased appetite for privately owned property, and a healthy active market driven by strong supply and demand.”
De Kock notes that of the approximately 5,9 million residential properties in South Africa, about 30% of these are located in township areas, with a sizeable 20% of the property transfers since 1994 occurring in these regions.
Lightstone estimates that of the 1.9 million formal residential properties located in traditional townships, around 800,000 are subsidised in some way (e.g. RDP or 99 year leases). Since 1994, peak transaction activity in the townships took place during 1997 and 2003, with 55% of the transactions to date occuring during this period. However this market was largely driven by new properties transacting for the first time (43% of the total) or were transferred from a local authority to an individual (34%).
Soweto, the largest township in South Africa, is not only the fastest growing, but is also leading the increase in the market value of township properties. Over the period of 2000-2004 the average transaction value of most properties in Soweto sold by individuals was below R100 000; however, since 2009, while the rest of the residential property market had a slow recovery, values transacting in Soweto has increased dramatically across subsidised and non-subsidised properties with an average transaction value in the last five years of over R300 000.
The top performing suburbs within Soweto are Chiawelo, Dobsonville, Emdeni, Protea Glen and Protea North. The highly sought after suburb of Protea Glen is leading in terms of the volume of transactions and Protea North leads in terms of average resale value which is currently standing at R556,551.
“Over the last couple of years, many township areas have undergone an enormous amount of transformation and are now known for their vivacity, cultural heritage and resourceful industries. With a healthy market driven by a strong demand and prices continuing to rise, Soweto, and many other townships, should continue to offer real value to investors in the future,” concludes De Kock.