GAUTENG TOPS HOME SALES, CAPE TOPS COST

August 27, 2007
By INGI SALGADO
Cape Town - Johannesburg and Tshwane scored South Africa's highest volumes of residential property traded as a proportion of total stock, while Cape Town came out as the city with the most expensive property.The findings were released in a Lightstone housing index report on Friday.Cape Town is the most expensive of the major metropolitan regions, with an estimated R450 billion in residential real estate in May 2007, followed by Johannesburg at R379 billion.But Johannesburg shows the greatest value and volume of residential property traded between January 2005 and February 2007.The total value of transactions was R63.5 billion, compared with R61 billion in Cape Town and R35.6 billion in Tshwane.First National Bank property strategist John Loos, who compiled the report along with Lightstone business development director Andrew Watt, said the prime driver of Cape Town's value was the relative scarcity of land."Cape Town has a mountain in its midst and is further constrained by the coast. Jo'burg, on the other hand, is landlocked, which facilitates urban sprawl," the report says.Foreign land buying and holiday property purchases by inland residents boosted Cape Town's residential values.Lightstone's standard house price index confirms a continuation of the downturn in house price inflation since late 2004 on a year-on-year basis. House prices grew by 18.4 percent year on year in April, less than the 18.7 percent revised rate in March.The index displayed relatively high price inflation compared with the house price indices of Absa and Standard Bank, as it gave a greater weighting to the lower end of the market than the other two indices, said Loos. On a monthly basis, April was the third successive month of slight price inflation, from 1.35 percent in March to 1.37 percent in April.This represented the lagged response by the index to last year's minisurge in housing demand, the researchers said. The trend is expected to be short-lived, because of interest rate hikes in June and August as well as the implementation of the National Credit Act in June. Lightstone said the coastal strip, which includes properties up to 500m from the coastline, notched up an unchanged year-on-year inflation rate of 10.6 percent in April.The Western Cape displayed the lowest price inflation of all nine provinces.Johannesburg metropolitan continued to reflect less cyclical characteristics, with a mild acceleration in price inflation.