“We have seen a shortage of stock across all the metropolitan areas in South Africa. The market is characterised by an oversupply of buyers in the cities of [the country],” Andrew Golding chief executive officer of Pam Golding Properties told CNBC Africa.
According to the IPD South African Property Index the South African investment property sector displayed an increase profit of 15.3 per cent to investors in 2013.
The IPD South African Property Index was conducted in December and consists of 60 per cent of the data from investment property within the professional management sector in the country.
“We [South Africa] have an interest increasing trend, the first interest increase we had at the beginning of the year has not affected the markets in any way,” he said.
The property sector in South Africa decreased in the period between 2007 and 2008 due the world economic crisis but has since seen growth in recent times.
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“We’ve seen a dramatic improvement from the 2007 and 2008 [period] when the International market turned off completely. We have seen international investors coming in back into our markets. New entrants in terms of the Chinese, Russian and American buyers,” he said.
According to the World Bank, South Africa has a GDP growth of 2.7 per cent and the black middle class has contributed more during the period of 2007 and 2013. The wealth report stated that 81 per cent of millionaires rose during this period. They have been substantial contributors to the demand increase of high-end residential property.
“We are seeing encouraging signs that is going to fuel our market on a sustainable rate going forward,” said Golding.
South Africa having the best infrastructure on the continent is also attracting the African middle-class from neighbouring countries who are purchasing the country's residential property.
In terms of regions the Johannesburg, Cape Town, and Durban have the most expensive houses on the market. Golding explained that banks are more willing to give out mortgages to buyers.
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“The credit criteria has improved, there is still some concern around affordability and the extent in which the banks will open the taps in terms of mortgage lending which fuel our industry,” said Golding.
BY: THANDO MATUTU