Here’s the only reason you need to buy in an estate
Annual house price inflation in estates is almost 2% higher than the national average. This is according to Pam Golding Properties which quotes the Association of Residential Communities (ARC) website which states that annual house price inflation in estates is 7.5%. Based on actual sales, Lightstone data pins national house price inflation at 5.8% for August 2016 year to date.
“In terms of value, currently estates account for around 22% of the market’s total sales value – up from 20.5% pre-recession and remaining fairly stable since late 2013,” says Dr Andrew Golding, CE of the Pam Golding Property group. “Unit sales in estates currently stands at around 14% of total market sales.”
Geographically, Pretoria constitutes the largest total number of units sold in estates, while Johannesburg’s estate market is the largest by value – although this margin is declining as the value generated by both Pretoria and Cape Town increases at a faster pace.
Price-wise, in Gauteng and the Western Cape the R3m+ price band accounts for a growing portion of total estate unit sales.
Indicating the popularity of estate living, between ARC and Lightstone there are currently approximately 6,000 to 6,500 gated communities in South Africa worth a total value of some R650bn. They boast some 320,000 residential properties at an average value of R2m per property. This is three times greater than the estimated national average of R700,000 per home outside of gated communities, and while they only make up 5% of South Africa’s total housing stock of 6,2m, they comprise 15% of total value (estimated at R4,3tn).
“Estate properties have staying power and usually perform better than the value of the property in neighbouring suburbs,” says Golding. “Living on an estate is about far more than security. There are numerous factors which attract people across all generations to an estate lifestyle. The new trend is towards so-called lifestyle estates which encompass ‘work, live, play, shop’ – all within a secure environment which provides a sense of community as well as easy access to educational facilities. Some estates even provide schools on site, while the leisure amenities encompass a host of features with the accent in newer estates on a broader lifestyle offering rather than as was previously the case, focusing mainly on one aspect. These facilities can also include gyms and other sports facilities and even shopping complexes.
“Generally these estates are situated in metropolitan South Africa, including new metro growth nodes where the cities or towns are expanding. These include Fourways in Gauteng, the rapidly expanding KwaZulu-Natal North Coast corridor as well as Knysna on the Garden Route.”
Far from being price prohibitive in general, estate living continues to attract a younger generation of home buyers, with more than 70% aged younger than 49 years according to Lightstone statistics.
“Catering for this market, which includes first-time buyers, many estates have introduced sectional title opportunities starting at prices below the R1m mark and offering excellent value for money,” says Golding.