GROWTH IN THE SOWETO PROPERTY MARKET
The current economic outlook for South Africa is putting the luxury housing market under pressure. On the other hand, properties priced below R1.5 million account for almost 80% of all real estate transactions recorded at the National Deeds Office.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, these kinds of properties, therefore, present interesting opportunities for investors. The Soweto market, for example, is reported to have averaged annual house price growth of around 30% within the last year.
This is according to Mahau Motaung, Broker/Owner of RE/MAX Ebenezer in Soweto, who explains that the low-income housing market in Soweto has become more like the average middle-income areas as property prices continue to rise along with the availability of cash buyers and property investors. “Soon, there will be no more land left in Soweto. We will then see the introduction of more duplexes and similar properties, such as those being built in Extension 11 Protea Glen. The way I see it, the Soweto property market can only grow and will soon become the Sandton of the South,” he elaborates.
Demand has become so high in certain areas that a few are willing to pay more than the asking price, especially if the property is next to amenities. “Soweto has a few popular shopping centres, including Maponya Mall, Jabulani Mall, Meadow Point and Protea Point, to mention a few. These malls have created high demand, pushing property prices up in the surrounding areas,” says Motaung.
The demand for rentals in Soweto also continues to grow as the youth enter the job market and desire to assert their freedom and enjoy a taste of independence. Motaung explains that many fail to meet the lending criteria to qualify for a home loan, but they view renting as an opportunity to learn the discipline of keeping up with monthly repayments, as they will on a bond in the future.
“Owing to the current economic climate, there is a high demand for rentals. Soweto is home to one of the University of Johannesburg’s campuses. This creates demand for student accommodation in the area. Chris Hani hospital also attracts those from neighbouring countries who, for health purposes, come to the area and require a property to rent while they receive treatment,” says Motaung.