Free State Best Capital Growth Play
Free State best capital growth play: Recent housing data shows the Free State is now the place for property investors to be. Find out why.
21 May 2010
Housing data released in recent weeks by more than one residential property player suggest that the Free State is now the place for property investors to be, with Bloemfontein and Parys experiencing a particularly strong uptick in both sales volumes and values.
Absa Bank’s latest housing overview shows that average prices in the Free State jumped 15,8% in first quarter 2010 year-on-year (y/y), compared to 9% growth for South Africa as a whole.
Interestingly, the average house in the Free State capital of Bloemfontein will set buyers back only marginally less than that of Johannesburg and Pretoria. According to Absa the average house in Bloemfontein currently costs R1,092m, compared to R1,125m and R1,122m in Johannesburg and Pretoria respectively.
SAPTG’s 2009 annual property review reveals a similar trend, with house prices in the Free State expected to show further strong growth. In fact, the Free State is forecast to be South Africa’s best performing province in terms of house price growth over the next two years.
SAPTG expects median house prices in the Free State to rise by a whopping 48% between 2009 and 2011, from R520k to R768,800. That compares to average growth of 13,5% expected for the housing market as a whole over the same two-year period.
The SAPTG report shows that the most popular suburbs in Bloemfontein (in terms of highest sales volumes and values achieved) are Langenhovenpark, Dan Pienaar, Universitas and Woodlands. The once sleepy village of Parys near the Vaal Dam, which has become a popular haunt among artists and Johannesburg city dwellers looking for a weekend getaway, is also singled out in the report as one of the Free State’s most active housing markets.
John Loos, property strategist at FNB Home Loans, cites two key factors that are keeping the Free State housing market in better shape than that of many other regions. “Firstly, it appears that the province didn’t create as big an oversupply during the building boom as other regions may have.
“Secondly, while the Free State is probably a lower long-term growth economy than many other bigger provinces, the Free State economy may have held up a little better through the crunch times.”
Loos says Bloemfontein as a regional capital has a sizeable chunk of government employees in its midst as well as a big agriculture sector which have been less affected by the recession than the manufacturing sector. He notes housing markets in areas exposed to the manufacturing sector, including the likes of Port Elizabeth and Durban, took a huge knock over the past 18 months. – Joan Muller