SA houses valued at R5.3 trillion
Category Market News
Western Cape homes, although only 17.7% of total, are worth R1.44 trillion.
Gauteng, the country’s smallest province, accommodates most of South Africa’s homes while the geographically biggest province – the Northern Cape – is home to the fewest.
This big divide amongst the provinces, particularly relating to value and volume, is according to an analysis of residential property throughout the country by Lightstone.
The collation of property statistics also revealed that there are 6.6 million homes in South Africa with a total value of R5.3 trillion.
Gauteng, the smallest province, has 34% of the total homes, equating to approximately 2.25 million houses. The Northern Cape, the country’s largest province, has only 178 200 homes, or 2.7% of the total.
The disparity is because the Northern Cape is mostly made up of low-density farmland and desert areas.
“As there are very few residential properties in such an environment, there is little transaction activity,” says Lighstone’s analytics director, Paul-Roux de Kock.
“Gauteng, on the other hand, is the economic hub of South Africa, with a lot of high-density housing around the major business hubs, and therefore 34% of all residential property is located in this relatively small region.”
The Western Cape is home to 17.7% of the country’s residential properties, 1.16 million, and KwaZulu-Natal 3.1%, or 864 600.
Limpopo has 3.2% of the total number of houses in the country and North West 4.9%. But as Manya Mooya, associate professor of property studies at UCT, points out, the key point is not the amount of land available in a province but the size of the population.
“Gauteng had about 24% of the population, in terms of the 2011 census data, despite it being the smallest province. That translated to about 675 people/km². The Northern Cape, on the other hand, had about 2% of the population despite its enormous area, with a density of only three people/km² and the lowest in the country.”
However, he says, this does not mean there is no demand for housing in that province.
What Mooya finds most interesting about the statistics is the large disparity between volume and value in respect of the Western Cape and, to a lesser extent, Gauteng.
Lightstone’s data shows the Western Cape’s 17.7% of total residential property amounts to 27.2% of the R5.3 trillion value of all homes. Gauteng’s 34% makes up 38% of the overall value of residential properties in South Africa.
The figures mean homes in the Western Cape have a combined value of R1.44 trillion and an average value of R1.23 million each. Homes in Gauteng total R2.01 trillion, with an average value of just over R897 000 each. Ideally, Mooya says the percentage volume and value figures of these two provinces should be “very close”.
“These stats simply mean residential property in the Western Cape is highly priced – relative to national norms. To put it slightly differently, the Western Cape is the most expensive (or unaffordable) province for residential property on average, followed by Gauteng. This is explained largely by economic factors (primarily GDP), but also social factors, especially in the case of Cape Town. The rest of the provinces have proportional values lower than proportional volumes, indicating relatively lower average residential property prices and, therefore, more affordable homes. Again the main reason is economic, but there are other factors.”
The housing problem
Mooya says the main issue boils down to affordability at the lower ends of the housing market, where the crisis exists, as a large proportion of the population cannot afford even the cheapest options that can be provided by private developers. In addition, the state lacks the resources to develop housing for this segment of the population, says Mooya.
“A significant proportion of the population couldn’t sustainably afford housing even if it were offered free. Property rates, electricity, maintenance and so on are simply beyond the affordability of many people.”
While echoing the beliefs of many in the property industry that there are no easy solutions, Mooya says the key lies in strategic partnerships between the state and private developers, in which the government “makes state-owned land (land cost is a significant input cost into house prices) available to private developers at zero or minimal cost, together with a strengthened system of both supply-side and demand-side subsidies”.
ARTICLE COURTESY PROPERTY360
Author: Bonny Fourie
