By: Joan Muller

IT'S NO SECRET that South Africa's five-year housing boom has seen a significant increase in property ownership, particularly among first-time buyers. But the rate at which South Africans have been accumulating second, third and fourth properties has also accelerated markedly.

Latest Standard Bank figures show that close to 12% (nearly one in every eight) of all residential property sales recorded at the Deeds Office are going to buyers who already own at least one property. That ratio has tripled over the past five years, up from 4% in 2000, and would typically include buy-to-let properties or holiday homes.

Standard Bank senior economist Elna Moolman says that investor participation in the housing market could be even higher if one strips out properties bought by the same people but registered in the name of different entities, such as companies or trusts.

She says there's no doubt that the residential property market has lured large numbers of new investment buyers over the past two to three years on the back of significantly lower interest rates and healthy capital gains prospects. Increased home values have allowed even middle-income earners to invest in more than one property by borrowing against the rising value of their existing primary homes.

Says Moolman: "The fact that SA's household debt repayment to income ratio is still not punishingly high, suggests that households have scope to further increase their exposure to residential property. The market also continues to offer double-digit price growth ? albeit at a much slower rate than the 30%/year plus fetched in 2004 ? which should encourage further money flow to investment properties."

The scrapping of transfer duties from 1 March on properties costing less than R500 000 could also see a new spate of investment buying over the coming months in lower- and middle-price brackets.

But property ownership hasn't only increased among wealthier South Africans who would typically be able to afford more than one property. Standard Bank research shows that home ownership has risen quite sharply among most of SA's income groups.

Moolman says SA added about 3,3m new home owners (older than 16 years) to its ranks between 2000 and 2005. That brought the total number of formal and informal home owners in SA to 24m (see graph). Some 74% of that figure ? or 17,7m ? represents ownership of formal brick and mortar houses, with the remainder mostly squatter or traditional huts.

Moolman says that it's encouraging to note that the benefits of SA's growing economy and a buoyant housing market have been shared throughout the population and not solely by upper income groups.

Rising home ownership figures ? particularly in the formal sector, where properties are financed through bank mortgages ? are confirmed by latest mortgage advance statistics from FNB property strategist John Loos. These show that the total value of outstanding mortgages ballooned by 130% over the past five years: from R232bn in January 2001 to R534bn in January this year.

Despite the huge increase in housing debt, it seems that SA's banks have no intention of tightening their mortgage lending criteria. Analysts say that the banks don't feel compelled to rein in mortgage lending, as the number of non-performing loans isn't yet signalling any difficulty in households' ability to repay housing credit.

Standard Bank figures show that the percentage of mortgages three months or more in arrears is still only at around 2%, down from 8% in 2003.

Nevertheless, estate agents are reporting a drop in demand for investment properties in higher price brackets on the back of a softer rental market. Residential letting group Trafalgar CEO Neville Schaefer confirms that rental yields have been steadily dropping from an average 8% to 10% three years ago to about 4% currently.

Regional director of RE/MAX Southern Africa Bruce Swain says that since September 2005 they've seen a marked decline in demand for investment properties costing more than R850 000. Up to that level, buying activity remains brisk.

Swain ascribed less demand for buy-to-let properties in the upper price brackets to higher holding costs and lower capital growth prospects. He expects residential property investors to switch increasingly to the more buoyant commercial property market.

Listed property funds (PUTs and PLSs) should be the biggest beneficiary of this trend.