Why are Suburbanites Moving Back to the Townships?

The information in the article is courtesy of Realestateweb ("We're moving back to the townships" - 19 November 2008)

Many property buyers living in the suburbs have now decided to pack up and move back to the townships. The reason might be that suburban homes have become unaffordable, while the market in the townships is booming. The FNB Township Barometer is also showing that the township market is slowing down as a result of general economic growth, inflation and interest rates.

Property strategist, John Loos says that the townships are in good shape, despite the slow market, and the shortage of stock is driving this boom. The statistics are showing that Durban’s has the highest shortage of stock of 68%, Cape Town 38% and Johannesburg 31%. This has pushed the property prices up, as supply cannot meet demand.

Further statistics show that 31% of buyers in Gauteng are believed to be from the suburbs, 26% in Cape Town and 24% in Durban. In Soweto alone there are an estimated 38% of buyers from the suburbs. Loos says that this might be due to infrastructure upgrades and retail developments – causing the area to be more attractive to buyer with purchasing power.

Lawrence Molepo is as an estate agent for Gilbert Estates in Protea, Soweto. According to him the booming property market can be due to the shortage of stock but also due to upgraded infrastructure.

Molepo explain that since the Maponya Mall has open the house prices around the mall have gone up substantially. A four-bedroom house cost less that R100 000 before the opening of the mall and is now selling for R300 000.

Molepo predicts that the positive growth in the residential property market might encourage developers to embark on large-scale commercial properties in Soweto.

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