Panning For Gold: Property in Johannesburg

Private Property South Africa
Property Professional

Buyers, regardless of their buying power, who invest in the Johannesburg housing market all want the same things: security, good schools and either easy access to major highways or reliable transportation.

It’s difficult to imagine, but Houghton, now one of the wealthiest suburbs in the city of Johannesburg had very humble beginnings and, along with the rest of the Witwatersrand, owes its existence to the discovery of gold. Originally owned and mined by the Houghton Estate and Gold mining Company, the small amount of gold on the site soon petered out and the land was de-proclaimed. In 1894 the company decided to transform the area into an exclusive residential township. Sales of the stands began in 1896. However by 1910 only 649 erven in Houghton Estate had been sold, albeit to a number of influential people, including some of the prominent mining magnates of the day. Nevertheless, nearby Parktown remained the suburb of choice. Things took a turn in the 1930s when leading architects began designing and building houses in the area. Strict building codes were enforced and houses had to feature roofs with slate, tiles or thatch; the use of corrugated iron was prohibited. The Houghton of today is renowned for its beautiful architecture and the area features some of the best examples of South Africa’s colonial designs set on large stands in this leafy suburb. Well-known for its schools, the area boasts some of the best educational facilities in the City including St John’s College that is housed in a beautiful Herbert Baker-designed building, as well as King Edward V11 Boys High School. Living in an area of this calibre comes at a cost and SAPTG figures indicate that the predominant price band ranges between R2m - R5m. There have been 46 sales within the last 12 months. The most expensive property sold cost R22.6m and the lowest price attained was R1 250m. Lieska Dieperink from Fine and Country says the fact that Houghton is in the heart of Johannesburg appeals to buyers who are employed by the city’s mining houses. Similarly, for the many investors who are self-employed or running their own companies, the nearby M1 offers easy access to the financial and commercial hub of Sandton. There is good security in place and this, coupled with large stands with established gardens and tree-lined avenues, appeals as it adds a sense of small village living. This intimate feel makes for sociable living and homeowners in the area have the advantage of knowing their greengrocer or receiving personal service from the local flower shop. Benoni, situated on the East Rand, had a bit of a rocky start. Famous for its mines, the area became a hot spot during 1922 when thousands of disgruntled miners went on strike. The revolt, which lasted for a year led to fighting between the police and the army and at one stage the South African Airforce were called in to bomb the offending individuals. Things are a lot quieter these days and the town offers a varied residential market, with properties ranging in price from R400 000 for a starter home to properties exceeding the R10m mark. Andre van der Merwe from Chas Everitt says the middle sector of the market is predominantly driven by young professionals moving up out of the traditional feeder markets of sectional title units. However, he says more interest is being shown by first-time buyers who have waited for a market correction over the past two years, leading to frustration and a decision that now is the time to purchase. The other driving force, he says, is elderly couples who are looking for the security that cluster developments offer. The average price that buyers in this segment are willing to pay ranges from R1.2m to R2.5m. “The most popular areas in this market segment are Farrarmere and Rynfield. These two suburbs are like chalk and cheese. Farrarmere properties offer stands ranging from 800m² to 1300m² and feature homes which are, on average, 30 years old. Rynfield properties are older and more established and range from 1500m² to 2600m² in size and the houses were built, on average, from 50 to 60 years ago.” He says, what is notable is that younger families are looking for large pieces of ground and are prepared to do extensive renovations, while the older folks are looking for smaller properties. Granny flats are at a premium and many buyers are insisting on having this type of accommodation on the premises. “Security is always a concern and we are often asked what the crime statistics of the area are and if there are security concerns in the target markets.” There are a number of good private and government schools in the area. Van der Merwe says that due to the proximity among all the suburbs in Benoni, buyers are willing to travel as long as they have secured their dream property. “In reality there is no premium paid for a property situated closer to the schools, but these properties do have a shorter period on the market and are easily marketable.” In his opinion, a suburb’s popularity is based on what meets the needs of the individual. For some it is easy access to work routes, while for others it may be the peace, quiet and serenity of an area. The position of a property in relation to shopping or medical facilities and schools is also important to some. The township of Soshanguve situated 45 km North of Pretoria is, according to Douglas Ravenscroft from Re/Max, the third-largest city in South Africa. The average price in the area varies between R350 000 to R500 000. The reliance on public transport plays a major role in buying decisions, as does the proximity to schools and shopping centres. He says that overall, security has improved due to bike patrols and a very active community policing programme. “The area has become increasingly popular with civil servants, who, in the past would have lived in areas such as Sunnyside in central Pretoria.” It appears that this is having a positive effect on development in the area and Ravenscroft says there is a large number of new developments on the go that consistently sell well. According to Jacques du Toit the Sectoral Analyst of ABSA, there has been a slowdown in the year-on-year increase in the average price for houses in the affordable category. Sales, however, appear to be strong in this sector and although the area is too big to deal with in its entirety, SAPTG statistics reveal that there were 151 sales in Soshanguve Ext 6 alone, totalling an amount of R19 164 865m. What has become clear is that South Africans essentially have the same needs and desires, regardless of where they live. In up-market suburbs, access to transport links is as important as access to reliable transportation in the lower end of the spectrum. Good schools attract buyers in all suburbs. Similarly, security remains a high priority across the board. Article courtesy of Property Professional, and is taken from their September/October 2010 issue.

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