Real Estate Investment

Residential private property investment in South Africa !

What makes a good real estate property for sale suburb? Why does real estate property for sale prices perform better in one real estate property for sale area and not in another? Where are the real estate suburbs with the biggest real estate growth potential? Where should one invest in real estate? PropertyHome has produced a Residential Property Investment Guide for 2008 in an attempt to answer some of these real estate property investment questions. The Residential Property Investment Guide is made up of three parts - the analysis of residential property sales figures, Neighborhood Watches of various real estate areas around the country and expert opinions on the real estate property market.

In the first section, data provided by PropertyHome is used to examine real estate property for sale transactions and real estate growth in the residential property for sale market. Deeds Office data lacks the necessary attributes that are needed to examine various real estate segments of the residential property for sale market. Notably, when it comes to geographical locations, the exact boundaries are not part of the real estate property data and there is confusion over where one real estate suburb ends and the next one starts.

In order to give all South Africa homes for sale a spatial representation, PropertyHome geo-coded each property for sale and while certain spatial boundaries such as provinces and municipal real estate areas were known, others were created by PropertyHome, by grouping points on a real estate area map in to real estate property for sale suburbs and metro towns. A metro town is defined as a group of real estate properties for sale, consisting of a registered township plus its real estate extensions.

PropertyHome analysed the data of 285,000 residential properties for sale - the total number of residential properties for sale that were registered and transferred by the Deeds Office over two years i.e. January 1, 2006 to December 31, 2007. Some residential properties for sale were transferred more than once in the time period but the real estate property for sale was only counted once. Only full title residential properties for sale that were transferred to individuals holding a valid South African ID, and had a value of between R20,000 and R20 million were analysed. In this way, the data excludes all sectional title properties for sale and purchases by foreigners. Deeds Office data does not differentiate between the types of properties for sale so PropertyHome used an algorithm on the ID number of the property buyer and assumed it was a residential property for sale if the ID was a valid RSA ID.

In addition, only residential properties for sale that were sold for the first time were included in the figures, which eliminated most of the "empty stand to completed building" price increase. Different real estate criteria were applied to the property for sale data and seven sub­sets were produced. As a consequence of this, the South Africa Property for Sale Transfer Guide data is not the same and the figures and results cannot be compared.

PropertyHome noted that due to real estate suburbs being a mix of residential property for sale and commercial property for sale and a combination of size and real estate type, an average price could therefore not represent any of the residential properties for sale in the real estate area when percentage growth was calculated. Instead, the median or middle value was used, which represented a price of 'most' residential properties for sale that were sold in the area (eliminating the odd high and low values).

Often a property sales price does not represent the true value of the residential property for sale and when the value of the mortgage bond registered is substantially higher than the price of the residential property for sale, it implies that there are planned improvements on the residential property for sale. As a result of this, the mortgage bond value is a better indicator of value and PropertyHome used the larger of the two.

·          Most sales by rand value: The table ranks the top 100 real estate metro towns that recorded the most number of property sales by rand value. In addition, the number of property sales in each real estate area is included.

·          Highest average price: The top 20 metro real estate towns that achieved the highest average price are listed in the table. Only areas where a minimum of 10 property sales occurred have been included.

·          Highest number of sales: The table lists the 20 real estate areas that sold the most number of residential properties for sale. The list includes the total sales value and average price achieved in each real estate metro town.

·          Highest percentage (%) growth: Each price group lists the real estate metro towns with the highest percentage real estate growth achieved. To accommodate for the different value of residential properties for sale in each area, PropertyHome analysed the residential property for sale data by three value bands. Each band was chosen to represent a third of the total volume. The lower real estate price group is residential properties for sale with an average value of below R250,000. The medium real estate price segment is residential properties for sale valued at between R250,000 and R600,000, while the higher real estate price group includes all residential properties for sale greater that R600,000. The real estate growth was calculated by the percentage increase of the median (middle) value of the residential property for sale between 2006 and 2007 i.e. the real estate price segment that the residential property for sale is included in depends on its original property valuation in 2006. The table lists 30 real estate metro towns in the lower price residential property for sale segment and then 40 and 30 respectively in the medium and higher real estate price group.

·          Highest number of sales in previously disadvantaged areas: The table lists the 20 real estate areas that sold the most number of residential properties for sale. The list includes the total property sales value and average residential property for sale price achieved in each real estate metro town. There were no restrictions on the value of the residential property for sale. Census information is available at a sub-place level and the boundary often spans across various real estate metro towns. PropertyHome used the sub-places where 80 per cent of the respondents to the census were residential property for sale owners and more than 100 individuals responded.

·          Highest average price in previously disadvantaged areas: The top 20 real estate metro towns that achieved the highest residential property for sale price as an average are listed in the table. Only areas where at least 10 property sales occurred have been included.

·          New-build growth: This is the only table where residential properties for sale registered for the first time are included. The top 50 real estate metro towns achieving the most number of property sales are ranked. The second part of the residential property for sale guide is Neighborhood Watches of 30 real estate suburbs around the country. These focus on a brief history of the real estate area, a description of the real estate suburb today and what the attractions and drawbacks are for the real estate metro town.

Author: Realtors Property Portal | South Africa Property for Sale