Property market still fragile
161 000 properties sold – down 35% on previous year
South African property Transfer Guide (SAPTG) analyst, Dieter Deppisch says the South African property market is still very fragile, although showing very slight signs of recovery. “In essence we see the market moving in a recuperative mode. Some pockets of activity are visible but fragility remains a national constant. In the medium price segment supply remains high while demand is stubbornly soft.
“In the 12 months to January 2011, 161 000 residential properties worth R140-billion, exchanged hands. This is 35% down on 2007’s numbers when 246,215 properties, worth R211 billion were transacted. Our 12 month moving average price of R869,565 is just about R100k lower than the 2010 average for properties between R300k and R5m.
Buyers are still driving prices down
“A number of risks to recovery in the market remain. Highly-indebted consumers along with the reality of rate hikes as high as 2% in 2012, leaves a pool of somewhat diffident buyers. Yet many sellers in a financial vice-grip, capitulate after having their house on the market for 4 months, 6 months or longer. Serious bargaining, akin to flea-markets, drives prices down so that less than 15% of sellers achieve their asking prices.”
“The building industry is struggling to make concrete gains. Developers are sitting with unsold stock or insufficient liquidity for land servicing. Soaring construction costs continues to dampen the appeal of building a new home. Acquisition of an existing house remains more economical under the present circumstances since building a new residence comes at a 40-50% premium according to analysts.
Gauteng leads the way
Provincial activity mirrors recent historical data. Gauteng is way ahead of the pack with a 12 month total of 68, 757 transactions, more than double its closest rival, the Western Cape on 33, 551 and KZN trailing at 14,787. If you are an estate agent in one of those provinces spare a thought for your compatriots in the Northern Cape who only saw 2,142 properties transacted in the past 12 months.
Drilling down to suburb level, the luxury Midstream Estate (Gauteng) continues to feature in our Top Ten data both in terms of large sales numbers (571) as well as value-of-sales. Not too far behind in sales volumes is Parklands (Western Cape) at an average price of R803, 000. While Morningside and Bryanston, both in Sandton, remain consistently high value-of-sales performers. The ‘platinum’ suburbs of Fresnaye and Camps Bay (Cape Town) as well as Thesen Island (Knysna) command average property transactions of over R5,5m. One property in Fresnaye recently sold for an eye-watering R62,5m!
“The average buyer age at 42, is virtually unchanged from the previous 12 months. This group, known as Generation X, (adults between ages of 30 and 45) constitutes the largest group of buyers. Well-established in their careers and with family responsibilities they are the economic drivers in real-estate purchases. Some are using acquired capital and/or good credit records to join property investment clubs, building property portfolios for long-term growth. In addition, more women are becoming home owners than before. Almost 36% of homes were registered in the names of female owners compared to 33% in the previous period.
Consumer Protection Act
“The near-term outlook remains delicate. The introduction of the Consumer Protection Act has moved some investors to adopt a wait-and-see attitude. Emotion is an essential driver in property sales.”
SA’s Top 10 Suburbs (by sales volume)
Top 10 suburbs are based on the total number of sales (property registrations for the period 1 December 2010 to 28 February 2011 and include both freehold and sectional title properties. Sales, where the purchase price is less than R100 000 or greater than R15-million, are excluded.
1. Ferndale, Randburg, Gauteng: 140 sales; average price R690 000
2. Protea Glen, Soweto, Gauteng: 138 sales; average price R306 000
3. Parklands, Milnerton, W. Cape: 120 sales; average price R832 000
4. Midstream Estate, Centurian, Gauteng: 118 sales; average price R1.17-million
5. Morningside, Sandton, Gauteng: 112 sales; average price R2.29-million
6. Douglasdale, Sandton, Gauteng: 103 sales; average price R1.17-million
7. Table View, Milnerton, W. Cape: 99 sales; average price R1.07-million
8. Claremont, Cape Town, W. Cape: 99 sales; average price R1.93-million
9. Bryanston, Sandton, Gauteng: 96 sales; average price R2.51-million
10. Sunningdale, Milnerton, W. Cape: 96 sales; average price R933 000
SA’s Top 10 Suburbs (by total value of sales)
Here the Top 10 suburbs are based on Total Value of Sales for the period 1 December 2010 to 28 February 2011 . Included are free hold and sectional title properties collectively and exclude sales where purchase price is less than R100 000 or greater than R15-million.
1. Morningside, Sandton, Gauteng: Total sales R256-million; average R2.29-million
2. Bryanston, Sandton, Gauteng: Total sales R240-million; average R2.51-million
3. Claremont, Cape Town, W. Cape: Total sales R191-million; average R1.93-million
4. Rondebosch, Cape Town, W. Cape: Total sales R157-million; average R2.04-million
5. Midstream, Centurian, Gauteng: R18-million; average R1.17-million
6. Fresnaye, Cape Ton, W. Cape: R137-million; average R6.55-million
7. Umhlanga Rocks, Durban, KZN: R130-million; average R2.59-million
8. Sea Point, Cape Town, W. Cape: R121-million; average R1.58-million
9. Douglasdale, Sandton, Gauteng: R120-million; average R1.17-million
10. Phoenix, Mt Edgecombe C.Club, KZN: R115-million; average R2.9-million