Freehold properties appreciate more

Property 24 Newsletter - 27 Oct 2010

Freehold properties are appreciating at almost double the rate of sectional title properties according to the Lightstone Residential Property indices, which has just released sales figures for June.

These figures show that inflation in prices of freehold properties rose by 9,6% in June compared with sectional title properties that rose by just 4,7%.

The national average inflation in house prices for June was, according to Lightstone, 7,2% and this is in line with the figures produced by various banks for the third quarter of this year.
The Western Cape topped the list of higher prices with an average rise of 8,6% followed by Gauteng at 6,1%, Eastern Cape at 4,0% and KwaZulu-Natal at 3,9%.

Interestingly, the affordable housing market (on a national basis) showed the highest price growth with prices up by 14,6% in June compared with luxury homes that rose by only 6,0%, high value homes by 6,1% and mid-value homes by 9,2%.

The average rise in prices in Tshwane was 7,8% compared with Cape Town and Ekurhuleni at 7,3%, Nelson Mandela at 6,1%, Johannesburg at 4,8% and eThekwini at just 2,5%.

Demand for coastal properties was also low as price inflation there was just 3,7% compared with 7,3% for non-coastal properties.

Unlike the average house price figures that are supplied by various banks, the Lightstone figures are based on repeat sales of properties that have been transacted at least twice in a particular period.

The figures are drawn from the Deeds Office in South Africa and each record contains the legal details of the property and the transaction. Author of the report, Andrew Watt says that for the purposes of this report, no farms have been included in the figures and any new developments have also been excluded.

He says that the figures also exclude sales-in-execution and any township sales.

“The repeat sales methodology is used by many international organisations to provide an accurate measure of what is actually happening in the property market,” he says.