Smaller homes have outperformed both medium- and larger-sized houses since as far back as 2001, with these homes returning growth of 368.5% on a cumulative inflation basis. This is according to John Loos, FNB’s household and property sector strategist, who said that in the same period, the medium-sized category grew by 347.7%, whereas the larger home inflated by a significantly lesser degree, posting 278.6% growth since Q1 2001.
“2016 saw what we believe to be a long-term trend continuing in terms of smaller-sized home price inflation outpacing that of medium- and larger-sized homes on average for the 7th consecutive year,” said Loos. “We remain of the belief that there is a long-term trend towards smaller home size, and that such home values can thus outpace the medium and large-sized categories for much of the time in terms of price growth.”
FNB categorises the three home sizes as: small-sized (20m² to 80m²), medium-sized (80m² to 230m²) and large-sized (230m² to 800m²).
In Q4 2016, small-sized homes’ (average price R610,468) price inflation was the highest of the three segments, at 3.2% year-on-year. This, however, represents a slowing in growth from Q3’s revised rate of 7.9% and Q1’s 11.9%.
“Next was the medium-sized home category (average price R1,100m) with 2.2% year-on-year price inflation – a deceleration from 5.8% in the Q3 and 7.4% in Q1 2016,” said Loos. “The large-sized home category (average price R1,923m) remained the ‘weak link’, slowing to 1.7% year-on-year price growth in Q4 2016, from a previous quarter’s 2.5%.”