Lightstone data for September 2021 – August 2022 reveals that Roodepoort is a popular choice for first-time buyers and families, with the largest proportion of buyers (almost half the total buyers in the area) between the ages of 36 and 49. Buyers aged 18-35 years represent 37% of the total buyers. Together, these two age groups make up 83% of the buyers in the area, as registered in the South African Deeds office. This supports Q2 data released by ooba, South Africa’s foremost home loan comparison service, which states that the average age of bond applicants is 39 years old. Moreover, a third of all sellers in Roodepoort are between the ages of 36 and 49 years. The 18-35 and 36-49 age categories make up 64% of the total number of sellers.
Roodepoort Property Landscape:
Roodepoort has seen significant development in recent years from a residential and commercial perspective, which has served to bolster the appeal of this lively suburban neighbourhood. This rapidly expanding residential area boasts a diverse property landscape that extends +160sqm along Johannesburg’s West Rand, and includes some of the city’s most prestigious landmarks, like the 300-hectare Walter Sisulu Botanical Gardens, as well as historic museums, premier golf courses and a selection of quality schools and medical facilities. The expansion and refurbishment of Clearwater Mall and Westgate Shopping Centre, and their prime positions along major travel arterials, as well as the addition of centres like Blueberry Square, Featherbrooke Village and the Hillfox Value Centre (to name a few) have drawn many new residents from all walks of life. Although the majority of homes in Roodepoort are freestanding, property options varied and include apartments, townhouses and cluster homes in security complexes. First-time buyers flock to areas like Welteverden Park and Wilgeheuwel, where the average sale price is below the R1 million mark. These suburbs boast a wide range of residential property – ideal for large or small families looking to be situated a stone’s throw away from leading primary and high schools, first-class medical facilities and sporting venues. Ruimsig, Little Falls, Willowbrook and Strubensvallei - either side of Hendrik Potgieter Road - have seen a swell of sectional title developments and lifestyle estates go up, beckoning to experiened investors and market entrants alike. Roodepoort offers accessibility and affordibility, with easy access to a number of commercial nodes, first-class shopping amenities, and major travel arterials.
Price Growth and Number of Property Sales:
Price growth, based on property registrations, in Roodepoort over the last year has been sluggish. This is evidenced in the poor price growth in sectional title and freehold property, as well as vacant land. Lightstone data reveals that the average property price for sectional title property (R745 000) for the year so far (based on property registrations) has dipped below 2021 figures. However, in comparison with freehold property and vacant land, sectional title property has had the highest number of property sales (based on registrations). Freehold property has seen only marginal price growth, up 3% from R1 550 000 to R1 600 000. The average property price of vacant land has plummetted to a third of 2021 figures. Unsurprisingly, buyers appear to be taking advantage of the lower prices of vacant land, evidenced by the fact that the number of sales transactions for the year to date is 35% higher than 2021 figures. The lower number of sales for sectional title and freehold properties (in comparison with 2021 figures) could be attributed to the fact that the data for 2022 represents only three-quarters of the year. That said, the current economic climate, aggravated by rolling blackouts, rising interest rates, higher living costs and geopolitical tension, has dampened demand and weakened affordability.
Number of Property Sales to Continue Growing:
Spring and summer are the selling seasons, and our sales specialists predict that the number of sales will continue to climb as the year draws to a close. While affordability has impacted the number of bond applicants in the last year, and therefore the number of registered sales, fewer applicants means that competition for business between the major banks has resulted in strong interest rate discounts and lower deposit requirements for qualified buyers with good credit records.
Sectional Title Property:
Competitively priced sales property in a sought-after suburb like Roodepoort will sell! This is evidenced in the number of sectional title and freehold sales. In the last year sectional title property in the R400 000 – R800 000 value band and R800 001 – R1 500 000 value band had the highest number of sales transactions, at 1590 and 1104 respectively – accounting for 88% of the total number for sectional title transactions. The number of sectional title property sold in these two value bands make up almost 50% of the total number of properties sold in the last year. This makes this property type the most popular in the area, with an average selling price of R838 000 – making it an accessible option for first-time buyers and market entrants - and comparably lower than areas like Randburg and Sandton. Currently, 60% of the properties listed for sale in Roodepoort on Property24 are for sectional title properties. It stands to reason then that the total number of sectional title property available in a specific area is significantly higher than freehold property, and this contributes to the higher number of sectional title sales. The number of sales of sectional title property over R1 500 000 declined sharply to 195 of the total sales registered for that property category. In Roodepoort there are far fewer sectional title properties available in the higher value brackets than in a high-value suburb like Sandton, which accounts for the lower number of sales in those price categories. That said, the proverbial “sweet spot” for sectional title property is and has been around the R1 million mark.
The Roodepoort sales market remains largely value driven, with 73% of transactions below R1 500 000. The average selling price for all four categories is R1 694 000 - slightly higher than Q2 data released by ooba, South Africa’s foremost home loan comparison service, which stipulates that the average purchase price for Gauteng North and the West Rand stands at R1 535 848.
Freehold Property:
Freehold properties between R1 500 001 and R3 000 000 (864) and between R800 001 and R1 500 000 (802) are also among the most active price bands and comprise a third of the total sales transactions for 2022. The average selling price for freehold homes in Roodepoort stands at R1 582 000, whilst on average freehold properties in estates sell for almost double that, at R3 034 000. This makes sense given that buyers are willing to pay a premium for the exclusive access to amenities and state-of-the-art security that estate living has to offer, for example, in lifestyles estates like The Falls or premier golf estates like Eagle Canyon. Currently, the most expensive home listed for sale in Roodepoort on Property24 is a freestanding home in Eagle Canyon Golf Estate. That said, the number of sales transactions for freehold properties outperformed freehold properties in an estate in the same price categories – 176 and 56 respectively. While this may be attributed to the fact that there are more freehold properties available for sale than freehold homes in an estate, taking the high cost of estate living into account it is more than likely indicative of the price preferences and sensitivities of the majority of Roodepoort buyers.
Average Listing Price of Properties Currently for Sale in Roodepoort (as listed on Property24.com):
Property24 compiled data on the average listing price of properties currently for sale in Roodepoort, by number of bedrooms. The asking price is directly impacted by the type of property, age of building/property, condition, and size of the property, as well as prevailing market conditions. In September alone, 7007 properties were listed as for sale on Property24. 2 Bedroom (2 089) and 3 bedroom (2 374) properties made up the largest proportion of listings – 64% of the total number of listings for September.
According to Property24 Listings for 2022, the average selling price is R240 000 lower than the asking price. This confirms that the residential sales landscape remains a buyer’s market and is expected to remain so for the foreseeable future. Sellers need to bear in mind that an oversupply of sales property, aggravated by desperate sellers accepting lower offers, and a smaller pool of qualified buyers, affords the aspirant homeowner strong purchasing power. Sales property will need to be competitively priced if it is to have a hope of selling timeously. However, while the current rate hiking cycle has placed household finances under increasing pressure, prime remains well below pre-pandemic levels and the banks’ approval rates remain steady. The local housing market is expected to remain resilient.
Property for Investment and Rental Purposes:
In TPN’s Investor Report, the credit bureaux give an overview of the rental increase and decrease trends in Roodepoort with regards to rental price. On average, sectional title property in the expansive Roodepoort area has seen little change in rental prices for the last year. Constantia Kloof, Florida Park, Roodekrans and Sonnedal are among a few of the areas where sectional title rental property has performed poorly. The average gross yield for sectional title property in Roodepoort is slightly higher than the national average. However, according to the Rode’s Report on the SA Property Market, rentals are still declining in real terms. The costs to the landlord (rates, taxes, and maintenance), as well as higher bond instalments, are rising faster than their rental income.
Rental price trends for freehold property appear more area specific, with suburbs like Weltevreden Park, Ruimsig, Wilro Park, Horison View and Florida Lake experiencing positive rental price increases while other areas like Poortview, Little Falls and Strubensvallei show significant rental decreases (more than 10%). The average gross yield for freehold property in Roodepoort is marginally higher than the national average.
Roodepoort Rental Yield:
It appears that Roodepoort landlords have had to curb rental escalations to keep paying tenants. This is reflected in TPN’s Rental Payment Index which shows that on average the rental payment trends for Roodepoort are positive, with most suburbs more than 5% above the national good standing index. Tenants in good standing refers to the percentage of tenants who have settled their rental account at the end of each month in full – this includes tenants who have paid within the grace period and tenants who have paid late. The national average for residential tenants in good standing in Q1 of 2022 was 81.68%, marginally lower than Q4 of 2021. 68.63% of tenants in the Roodepoort area paid on time and in full. A further 3.72% of tenants paid within the grace period, and 8.39% paid late. According to TPN’s data, 7.19% of tenants in Roodepoort did not pay their rent, only slightly higher than the national average of 7.03%. TPN reports that the rental price range for Q3 2022 for sectional title property is R3 000 - R10 000 and for freehold property, R4 000 - R12 000, with the average rental price for both categories around R7 000. This puts Roodepoort tenants in the low- and mid-value bands. TPN cautions that those tenants in the lower market bands (spending less than R7 000 per month on rent) represent the largest portion of the rental market and are the most financially fragile. Tenants in this value band present the greatest risk of defaulting and are the poorest performing category of tenants in good standing.
In summary, rising interest rates may positively impact rental demand for competitively priced rental property. This is reflected in TPN’s higher Market Strength indices and lower Vacancy Rate. Landlords with properties in the lower value bands (less the R7 000) should partner with a professional property practitioner they can trust to apply strict screening criteria to new tenant placements, as these tenants remain the most price sensitive and are at the highest risk for defaulting. Landlords with properties in the mid- to high-value brackets are not exempt from the risk of poorly performing tenants. In fact, these tenants often have a higher percentage of their salaries going towards debt obligations and nondiscretionary spending, and so will be hard hit by the higher cost of borrowing. That said, tenants in these price brackets have shown continued improvement in good standing over the last several quarters, indicating the presence of adequate financial buffers. While inflationary pressure may force homeowners to implement rental increases to remain abreast of escalating costs, conservative rental escalations may be the difference between keeping a paying tenant and filling a vacant property. South African consumers are facing a cost-of-living crisis spurred by rising food and fuel costs, and TPN predicts that getting rental payments in on time and in full is likely to be a challenge going forward.
