FNB_Gauteng Sub-Region House Price Indices

1. 29 October 2017
MARKET ANALYTICS AND
SCENARIO FORECASTING UNIT
JOHN LOOS:
HOUSEHOLD AND PROPERTY
SECTOR STRATEGIST
087-328 0151
john.loos@fnb.co.za
LIZE ERASMUS
STATISTICIAN
087-335 6664
lize.erasmus@@fnb.co.za
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PROPERTY BAROMETER
FNB Gauteng Sub-Region House Price Indices
Major Metro Gauteng residential regions still showing real
house price decline, but with the low-priced end appearing
to be mildly stronger than the high end.
Our 3rd
quarter 2017 Gauteng Metro and Major Council House Price Indices
continue to show rates of growth below general economy-wide consumer
inflation, pointing to ongoing price decline in real terms (when adjusted for
consumer price inflation), and likely improvement in housing affordability
when considering house price inflation relative to income inflation.
THE BROAD GAUTENG METRO PICTURE
Using Deeds Office Data, we construct a set of house price indices for key
sub-regions within the province of Gauteng, the aim being to evaluate this
regional housing market’s performance in more detail.
We have then rolled up this set of sub-regions into overall house price
indices for each major metropolitan council region as well as for each district
municipal region in those areas outside of Gauteng’s 3 metros.
All 3 of Gauteng’s major metros continue to show low single-digit house
price growth.
In the 3rd
quarter of 2017, the City of Tshwane’s estimated average house
price growth rate was 4.40% year-on-year, by a small margin stronger than
Ekurhuleni’s 4.21% and City of Joburg’s 2.31%.

2. REAL HOUSE PRICE PERFORMANCES
With Gauteng Consumer Price Index (CPI)
Inflation at 4.8% year-on-year for the 3rd
quarter
of 2017, these low nominal house price growth
rates translate into house price declines in real
terms (when adjusted for CPI), Tshwane to the
tune of -0.3% year-on-year, Ekurhuleni -0.5%
and Joburg -2.3%.
The 3 Gauteng Metros have been undergoing a
gradual real house price correction for much of
the time since the beginning of 2008.
Since the 1st
quarter of 2008, Tshwane’s
cumulative real house price decline has been
-22.3%, Joburg -24.25% and Ekurhuleni -25.5%.
WE ZOOM IN ON THE CITY OF JOBURG’S MAIN REGIONS….MEDIOCRE GROWTH EVERYWHERE, WITH THE
FORMER TOWNSHIP REGION AROUND SOWETO SHOWING THE HIGHEST GROWTH
There are no strong “outperforming” regions in Gauteng of late. Over the past 5 years, the lowest income region,
i.e. the former “township” region of Diepkloof-Soweto-Meadowlands-Pimville has shown the strongest
cumulative growth of 42.82%, with the Midrand-Diepsloot region a distant second with 26.33% cumulative
growth. At the weak end, the highest priced region of “Sandton and Surrounds” has grown the slowest growth off
the highest base, i.e. 17.92%.

3. More recently, the Diepkloof-Soweto-Meadowlands-Pimville region remains the highest estimated house price
growth region at 4.28% year-on-year in the 3rd
quarter of 2017. However, this price growth rate itself is weak,
negative in real terms, and only slightly above the other low end region of Lenasia-Orange Farm-Ennerdale-
Lawley, at 4.04%. Nevertheless, this would suggest that the City of Joburg lower price markets are a little
stronger, and the high end weaker, with the most expensive “Sandton and Surrounds” end measuring a very slight
-0.1% year-on-year price decline.
TSHWANE – ALSO HINTING AT SLIGHTLY STRONGER LOWER END MARKETS
In Tshwane, the relative market strength of late also appears to have been more at the low end.
Over the past 5 years, cumulative house price growth within Tshwane is estimated to have been the strongest in
the Winterveldt-Mabopane-Soshanguve-Ga-Rankuwa-Hammanskraal region, to the tune of 66.98%. In such
former “township” regions, care must be taken with interpretation, because where Government subsidized “RDP”
homes are transferred to their new owners, the registered amount in the deeds data can be below market value,
meaning that a repeat sale can come off an artificially low base.

4. However, another low end area, Pretoria West, shows the 2nd
highest cumulative growth to the tune of 42.11%,
followed by Pretoria North East with 32.44%, also thus pointing to low end markets having done a little better
than higher priced regions in recent years.
In the 3rd
quarter of 2017, those 3 same regions again came out as the 3 highest price growth regions too.
EKURHULENI SUB-REGION PERFORMANCE
Ekurhuleni also appears to have experienced greater market strength at the lower end. Some of the strongest
cumulative house price growth over the past 5 years was seen in the lowest average priced areas, namely Tokoza-
Vosloorus-Katlehong with 44.33%, Nigel with 37.91%, Brakpan with 30.81% and Springs by 28.49%. Those 4
regions are the 4 lowest average house price regions in Ekurhuleni. Olifantsfontein region, a relatively high priced
region by Ekurhuleni standards, in excess of R800,000 (R805,000) showed very strong growth of 40.85%, but we
believe that this is in part due to difficulty in eliminating much of the “land-to-building” effect on the repeat sales
index, as this is a relatively new area with much building activity in recent years.
Other higher end areas with average prices above R800,000 (higher by Ekurhuleni standards) such as Alberton
(16.97%) and Edenvale (16.7%) had relatively low cumulative house price growth.

5. In the 3rd
quarter of 2017, it remained the lower average price end that seemed to do better, with Nigel (18.6%),
Tokoza-Vosloorus-Katlehong (11.8%) and Brakpan (6.94%) being the strongest 3 regions price growth-wise.
THE MANUFACTURING-DEPENDENT EMFULENI REGION APPEARS TO REMAIN THE MOST DEPRESSED HOUSING
MARKET
The Emfuleni District, which includes major towns of Van der Bijl Park and Vereeniging, is heavily Manufacturing
dependent, and the Manufacturing Sector in South Africa has been in the doldrums in recent years. The Van der
Bijl Park area is especially Manufacturing-heavy.
This, we believe, has had an influence on cumulative Emfuleni house price growth of only 21.65% over the past 5
years, but more specifically on the Van der Bijl Park region’s weak 16.03% cumulative house price growth.

6. As at the 3rd
quarter of 2017, the region’s year-on-year percentage change was very weak at a slightly positive
+0.07% rate, with Van der Bijl’s negative -0.41% rate being the weakest sub-region of Emfuleni
CONCLUSION
Although the Gauteng residential markets don’t show any great strength at present, there appears to be a broad
pattern of low priced sub-regions performing a little better than the high-priced end.
This appears to tie in with what the FNB Estate
Agent Survey tells us regarding 1st
time buyer
levels in Gauteng’s Metros, i.e. that in the 2017
year-to-date, estimated 1st
time buying in
Greater Joburg was 26.62% of total home
buying, and 24.3% in Tshwane, both
percentages being relatively strong and above
the national average of 20.26%.
Solid 1st
time buying in the province may be a
key source of support for the low end of the
housing market.
At the high priced end in each metro, on the
other hand, confidence in the country’s
economic future can be a reason for buyer caution amongst higher income groups, while it is also arguably about
the high running and transaction costs related to higher value homes that comes with municipal rates and tariffs
rising at rates well-above general inflation in recent years, and higher transfer duty brackets at the high end.
However, while the low priced end appears to be stronger than higher up the price ladder, broadly speaking, it is
by no means very strong either.
Down in the Emfuleni Regions near the Vaal River, the Manufacturing-dependent Van der Bijl Park appears to
stand out as the weakest housing region in Gauteng.

7. HOUSE PRICE GROWTH SUMMARY TABLES
Q4-2016 Q1-2017 Q2-2017 Q3-2017
Cumulative 15-
year growth
Cumulative 5-
year growth
CITY OF JOHANNESBURG TOTAL 3.79% 3.26% 2.77% 2.31% 248.88% 22.10%
Johannesburg 4.29% 3.65% 2.57% 1.53% 279.65% 20.13%
Johannesburg South 4.65% 3.97% 3.32% 2.67% 271.02% 20.19%
Diepkloof-Soweto-Meadowlands-Pimville 3.71% 3.10% 3.28% 4.28% 831.22% 42.82%
Midrand_Diepsloot 4.78% 4.26% 3.46% 2.68% 243.43% 26.33%
Randburg 3.68% 3.44% 3.46% 3.56% 197.02% 20.63%
Roodepoort 2.21% 2.21% 2.82% 3.55% 201.10% 19.93%
Sandton and Surrounds 2.35% 1.48% 0.62% -0.10% 167.55% 17.92%
Lanasia-Orange Farm-Ennerdale-Lawley 5.51% 5.00% 4.27% 4.04% 378.42% 19.71%
Quarterly year-on-year percentage change
CITY OF JOHANNESBURG SUB-REGIONAL HOUSE PRICE INDICES – AVERAGE GROWTH RATES

8. Q4-2016 Q1-2017 Q2-2017 Q3-2017
Cumulative 15-
year growth
Cumulative 5-
year growth
CITY OF TSHWANE ROLL UP 4.52% 4.54% 4.52% 4.40% 231.54% 29.69%
Akasia 1.84% 2.39% 3.90% 5.51% 263.93% 23.94%
Bronkhorstspruit-Cullinan-
Rayton-Ekangala-Refilwe
4.60% 4.56% 3.17% -0.46% 274.04% 14.74%
Centurion 4.88% 4.44% 3.87% 3.26% 194.83% 29.19%
Pretoria-Roodeplaat 4.11% 4.50% 4.68% 4.46% 209.41% 26.76%
Winterveldt-Mabopane-
Soshanguve-GaRankuwa-
Hammanskraal-Kudube-
Themba
12.61% 10.77% 11.18% 13.14% 607.26% 66.98%
Pretoria Central 3.78% 5.80% 7.00% 7.19% 362.17% 23.33%
Pretoria East 5.27% 4.53% 3.79% 3.24% 177.35% 27.36%
Pretoria North 3.52% 4.20% 4.62% 4.73% 212.96% 23.77%
Pretoria North East 4.68% 6.60% 8.53% 8.91% 297.32% 32.44%
Pretoria South East -0.93% 0.20% 0.20% 0.01% 205.06% 21.42%
Pretoria West 5.44% 8.17% 10.67% 12.59% 420.43% 42.11%
PRETORIA ROLL UP 4.56% 5.33% 5.99% 6.28% 241.11% 30.00%
Quarterly year-on-year percentage change
CITY OF TSHWANE SUB-REGIONAL HOUSE PRICE INDICES – AVERAGE GROWTH RATES

9. Q4-2016 Q1-2017 Q2-2017 Q3-2017
Cumulative 15-
year growth
Cumulative 5-
year growth
EKURHULENI 4.17% 4.03% 4.06% 4.21% 289.06% 24.26%
Alberton 2.47% 2.91% 2.80% 2.31% 232.77% 16.97%
Benoni 2.65% 1.80% 1.62% 1.77% 207.77% 15.08%
Boksburg 3.35% 2.56% 1.91% 1.27% 219.20% 16.88%
Brakpan 6.46% 7.42% 7.78% 6.94% 329.32% 30.81%
Edenvale 1.01% 0.43% 0.11% -0.17% 213.03% 16.70%
Germiston 3.69% 4.30% 4.42% 3.95% 260.43% 21.39%
Kempton Park 4.84% 5.12% 5.03% 5.03% 268.61% 22.93%
Nigel 8.78% 10.09% 13.88% 18.61% 448.82% 37.91%
Olifantsfontein 5.94% 2.87% 0.23% -1.38% 1033.04% 40.85%
Springs 3.65% 3.13% 3.24% 4.00% 323.52% 28.49%
Tokoza-Voloorus-Katlehong 3.42% 4.93% 7.50% 11.80% 782.68% 44.33%
Quarterly year-on-year percentage change
CITY OF EKURHULENI SUB-REGIONAL HOUSE PRICE INDICES – AVERAGE GROWTH RATES

10. Q4-2016 Q1-2017 Q2-2017 Q3-2017
Cumulative 15-
year growth
Cumulative 5-
year growth
EMFULENI 3.83% 2.84% 1.01% 0.07% 353.85% 21.65%
Evaton-Sebokeng 12.79% 10.09% 5.02% 3.89% 615.25% 63.77%
Vaal-Vanderbijlpark 1.62% 0.70% -0.44% -0.41% 333.60% 16.03%
Vereeniging 3.93% 4.54% 4.06% 2.90% 313.72% 21.76%
Quarterly year-on-year percentage change
Q4-2016 Q1-2017 Q2-2017 Q3-2017
Cumulative 15-
year growth
Cumulative 5-
year growth
MOGALE CITY 2.37% 3.12% 4.23% 5.09% 262.26% 26.12%
Krugersdorp-Magaliesburg-Mogale 3.33% 3.32% 3.00% 2.21% 226.41% 22.98%
Randfontein 0.25% 3.61% 8.48% 13.88% 291.55% 28.05%
Quarterly year-on-year percentage change
Q4-2016 Q1-2017 Q2-2017 Q3-2017
Cumulative 15-
year growth
Cumulative 5-
year growth
LESEDI 0.94% -1.75% -3.74% -4.17% 244.15% 9.62%
MERAFONG 5.57% 2.84% 2.22% 1.79% 306.09% 9.56%
MIDVAAL 2.85% 5.60% 8.21% 9.70% 339.00% 36.14%
WESTONARIA 10.67% 13.66% 14.41% 15.26% 545.56% 38.78%
Quarterly year-on-year percentage change