Soweto is chiefly known for its role in the country’s anti-apartheid movement but with the developments taking place there having a ripple effect, it’s also making a name for itself as the township with the most expensive properties.
The price of residential properties in Soweto appears to be playing catch-up to the rest of South Africa, having only begun accelerating in 2005. Property prices in townships were rising less sharply than property prices in the suburbs because of concerns over crime, people’s reluctance to buy and the lack of amenities such as shopping malls and banks to support a middle-class lifestyle.
With all the roads tarred two years ago, street lighting in place, people paying more attention to aesthetics of the area and of course mall mania having hit Soweto with the opening late last year of the Maponya Mall, it’s no wonder that both residents and those from outside the township are looking to buy here.
This boom is evident in areas of Soweto such as Protea North, Diepkloof and Diepkloof Extension, where properties are trading at nearly double those in Khayelitsha and Langa townships in Cape Town.
Township properties have an average of seven potential buyers, according to First National Bank’s Property Barometer for the third quarter of 2007, which is based on the perceptions and expectations of estate agents. The Barometer notes that it takes around three weeks to close a deal in Soweto suburbs. In formerly white suburbs of Johannesburg it takes on average three months before a property is sold.
The survey also reveals that while affordability was important, factors such as the lower charges for rates, lights and water in the township compared to more affluent areas of Johannesburg also influenced buyers. Many people also felt attachment to the area, having grown up there and being familiar with the environment.
Rising disposable income due in part to tax cuts, low inflation and the growth of the black middle class has ensured that there are now more individuals in income brackets that banks are comfortable with, and they are more willing to finance home purchases.
It was also found that about 94 percent of sellers in the Johannesburg townships achieved their asking prices, compared with only 47 percent in other areas, including the most affluent suburbs to the North, such as Sandton and Illovo.
John Loos, property strategist at First National Bank, said other factors influencing this trend included rapid economic growth, which was boosting township purchasing power, and a shortage of property stock coming onto the township markets.
“Through the main part of the property boom, a lot of developments were focused on the higher end of the market and in the traditional suburbs. Many of the upwardly mobile township residents moved into the more affordable former white areas.
“These more affordable former white areas are becoming less affordable because of rising prices and as a result, the township markets, typically far more affordable, are becoming more appealing to some,” said Loos.