The emerging market has surfaced

The emerging market has emerged, according to RE/MAX Southern Africa.

Statistics indicate in areas such as Pietermaritzburg an estimated 40 percent of all residential property sales now involve previously disadvantaged buyers and their full merging in all buying sectors within the property market.

“With the racial integration of South Africa's middle class, there can no longer be said to be racial differentiation in real estate. The racial categorisation of many areas has changed considerably over the past few years, leaving classification of geographical areas determined only by income profiles and lifestyle patterns,” says Rob Hyde, Broker/Owner of RE/MAX Traders in Gauteng.

Statistics presented by UNISA's Bureau of Market Research show that South Africa's black middle class is clearly on the up – almost 40 percent of the 20 percent highest income earning category of households are black.

In the mid to late nineties the anticipated trend in property was for black buyers to target traditionally typically white-owned areas. Instead, buying trends tended to follow more conventional patterns, dependent on the economic and financial capabilities of buyers rather than a racial focus.

Vigorous activity in the property sector is now evident in all levels of the market where black buyers are concerned. The age-old cycle of young first-time buyers entering the market initially through the acquisition of an apartment, progressing to a townhouse as they accumulate equity, moving to a house as family demands play a role, and finally back to a townhouse or apartment as the children leave the nest is still relevant and stimulates substantial turnover in the market.

With mortgage rates at a 25-year low, home ownership is within reach for a huge number of first-time buyers. The first cycle of ownership for black buyers who entered the market soon after democracy is now complete. In fact, many have already journeyed through the third and even fourth phase in the property ownership cycle. This sector of the market is embracing the culture of homeownership as a wealth generator, typically progressing from entry level to the middle-income bracket and finally to large properties in upmarket suburbs.

“The re-appointment of Pietermaritzburg as the capital of KwaZulu-Natal has seen as huge influx of civil servants into the city, putting unprecedented pressure on property stock levels,” says Shanjay Maharaj, Broker Manager with RE/MAX Midlands. “Similar patterns are evident in Gauteng, with a significant increase in black ownership of residential properties in Pretoria's central, eastern and western suburbs, and Johannesburg's northern suburbs, with government employees wanting to live in close proximity to their place of work.”

Maharaj says despite the fact that the rental market is in over supply and there is downward pressure on rentals, many families are opting to buy their first homes in the belief that higher monthly costs will be offset by capital appreciation in the longer term.

ENDS