Be kind to an estate agent today, they are going through tough times
If your local estate agent has been a little stressed recently, spare a thought. As I will demonstrate using the verified deeds office data the first seven months of 2018, the most severe drop in concluded transactions since the "Great Recession" of 2008/9 following the global financial crisis is underway.
Ten years later we are experiencing much of the same pain. If we consider the two powerhouses of real estate transactions within the greater Ballito/Dolphin Coast area - Zimbali Coastal Resort and Simbithi Eco-Estate, and simply analyse every concluded transaction recorded through the deeds office for the 7 month period from January to July 2018 and carefully compare these sales to the same period of the prior year, the stark reality of what sellers and estate agents in the area are facing becomes clear.
Focusing first on Zimbali and looking at the first seven months of 2017, we note that 65 sales were concluded to a gross value of R419,042,100. Of these R204,329,100 or 22 properties were freehold homes. R214,713,000 represented by 43 sales were sectional title units.
For this period 48.76% were therefore freehold sales and 51.24% were sectional title transactions. Staying with Zimbali and skipping ahead to the same seven-month period for 2018, a dramatically different picture emerges. Only 19 concluded sales to the value of R119,583,450 have been registered representing a meager 28,54% in terms of the current year as a percentage of the prior year.
Of these 19 sales, 8 were freehold properties represented by a gross sales value of R66,800,000, and 11 were sectional title units represented by sales of R52,783,450. The gross sales value difference (decline) between 2018 versus 2017 for the period is a massive R299,458,650. Put more emphatically sales are down by -71,46% year on year in Zimbali for the first seven months of the year.
In terms of the number of properties transacted freehold sales were 14 lower or are only 36,36% of the prior year. The sectional title sales were 32 units fewer or only 25,58% of the prior year. Total sales for the period were 46 lower or only 29,23% of the prior period. In business when your market is more that 70% down you are going to have some anxious people.
As a comparative I analysed all the Simbithi transactions for the same seven month periods over the two years. The first seven months of 2017 yielded 78 sales in Simbithi with a gross value of R276,179,730. Of these R140,621,240 or 35 sales were freehold homes (50,92%) and R135,558,490 or 43 sales were sectional title sales (49,08%). Looking now at the same period for 2018 we note a gross sales value of R146,040,000 represented by 37 sales. The current year gross sales are therefore only 52,88% as a percentage of the prior year (down but quite a bit better than the 28,54% for Zimbali). For Simbithi the number of sales were 41 fewer with the 2018 number of sales being only 47,44% of the prior year.
Our local figures support the view that the higher end of the residential real estate market has been hardest hit. Be kind to an estate agent today, they are going through tough times.
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