A study of the price inflation and deflation across the three price bands in Tshwane over the past 20 years shows the staying power of the high-end market.
Pretoria’s high-end property market has witnessed an inflation-adjusted 100% price growth over the past two decades, according to data from the City of Tshwane, which makes use of Absa house-price statistics.
The middle and lower segments recorded similar growth of 82% and 78%, respectively, over the same period.
Between 2000 and 2005, average house-price growth in the higher brackets ranged between 11% and 20% year on year. The middle segment boasted growth of 9% to 21% year on year, while the lower end notched up between 9% and 22%.
While these figures look impressive from the outset, studying average annual growth presents a more realistic picture.
Some 5,56% average growth was achieved in the higher-end market, while the middle and lower end were equally unimpressive at 4,5% and 4,3% between the years 1996 and 2014. Negative annual growth was recorded across all property price bands in 2008 and in 2009, while 2011 suffered the same fate, recording between -3% and -11% across the three price bands.
In 2012, the high and middle market each recorded positive growth, while in 2013 and 2014 the high end boasted 5% year-on-year growth, the middle market, -3% and 0%, and the low end, 1% and 5%.
It’s clear from the stats that high-end market seems most impervious to the market vagaries that have characterised the past 20 years.
An anonymous source in the City of Tshwane believes the reason that the higher end is experiencing higher price inflation is because of supply-and-demand principles.
“The simplest reason we could come up with for the slower increase in the lower groups was the mere fact that there is more competition in these groups,
” he says. “Thus the market has to be priced more effectively to attract buyers.
“Furthermore, we also found that a majority of the households in Tshwane are in the medium- and low-income groups, further corroborating the lower growth in the latter two markets.”
This article originally appeared in Neighbourhood, Sunday Times.