November saw the launch of the Pam Golding Residential Property Index – the first national quantitative analysis of house price inflation, as well as a comprehensive appraisal of SA’s residential property market in its many complexities.
Highlighting market movements and property value trends on a regular, monthly basis, this is an accurate guide providing valuable insights for anyone seeking information. The report was initiated and dveloped by PGP in association with expert market analysts, Lightstone.
Fills a need
Dr Andrew Golding, Chief Executive of the Pam Golding Property (PGP) Group, says: “We believe this fills the needs for an in-depth and unbiased analysis of national market information derived from some of the country’s most reputable and professional information sources”.
The index is unique as it portrays an accurate, holistic snapshot of property pricing trends in the residential real estate market, rather than a confined view based purely on average sales data, and according to very specific market segments.
Repeat sales methodology
“The index is based on the logical ‘repeat sales’ methodology – which is internationally recognised as the premier method for indexing house prices. This incorporates residential property transactions that are registered at the Deeds Office as well as other data sources across SA’s property market, and includes PGP’s extensive sales data,” says Andrew.
“Rather than focusing purely on average price indices, as is commonly the case in the industry, we have utilised repeat sales indices as these provide an accurate and tangible measure of the actual price inflation of properties that have been transacted at least twice within a specific period of time. In other words, we are literally comparing the price changes of the same properties over time, so it is a very accurate indication.
“Given the cyclical nature of the property market and the significant impact of the recent recession, from which the market has emerged with customary resilience, we have included in this first edition an interesting interpretive analysis of current and past trends of the national market as a whole, as well as sub-indices of the major metro regions around the country.”
All price segments are experiencing robust activity, and the index clearly indicates the acceleration in value growth of the R1-million and below price range, which, for 2014 to date, has taken off to an average high of 12% in overall national terms. Notably, across KZN, the value increase in homes below R1-million has surged above 15% and is still climbing. While value growth in higher-priced properties of over R3-million has slowed down after a notable upturn, these continue to lead the market – as they have done since the start of the market upswing back in 2000, reflecting average house price value gains of some 15% year-on-year.
Somewhat surprisingly, the middle market for homes between R1-million and R2-million has slowed, while the market for homes valued at R2-million and upwards is holding up well and is more or less tracking the national average.
The index also notes the growing trend towards smaller homes as urban land scarcity puts upward pressure on property values – with the average size of a full-title house reducing from almost 210sqm in the early 70s to just over 140sqm. In a similar vein, and coupled with a move towards convenient, lock-up-and-go, low maintenance accommodation, there has been a huge increase in sectional title homes being built.
On the question of sustainability, the index makes the point that, bearing in mind the potential impact of various macro-economic factors, a combination of increasing confidence, pent-up demand from a browing multi-racial middle-class and the accelerating pace of urbanisation suggests that the turnaround will last.