Bugle Sales Talk Editorial

As with stock-broking, an actively traded market characterized by high transaction volumes is the lifeblood of an estate agency. Markets, suburbs or estates that are characterized by low trade volumes are typically under-represented by estate agents and agencies as the rational decision is to limit effort expended in those markets and to focus on the high trade markets. Within our greater Ballito area we have benefitted from actively traded estates and suburbs that are driven by migration into these areas from Gauteng and Pretoria on the one hand and by the move northwards by families previously living on the Berea, in Durban-North, Umhlanga Rocks and surrounds.

The first main catalyst was the completion of the uShaka International Airport with its surrounding Dube Tradeport, which continues to grow. The road infrastructural upgrade of the Ballito interchange off the N2 was the second catalyst. The third main catalyst for growth in our regional area is the new shopping centre that is currently being developed on the Junction Shopping Centre site. Most people will remain blissfully unaware of its scale and impact until it is largely complete. The negative externalities of more traffic and possible congestion to the area will be offset by the significant advancement of amenities and choice that it will deliver. Ballito has come of age and in the process become one of the most desirable areas in the country to live and work.

FNB recently published a report on national property transaction volumes, which was very interesting. The deeds office data, when sorted by transactions by individuals only rather than legal entities so as to eliminate commercial transactions, indicated a growth rate of 2,4% during 2014 and then a flattening off of growth to -0,3% for the period January to April 2015. The average number of monthly transactions identified for the 2015 period is 20,085 per month, which is very similar to the 20,153 per month for the corresponding period in 2014. The recent low point in transaction volumes was in 2009 with an annual volume of 209,655 transactions.

The 2014 level of 269,623 was 28,6% above this low. However the peak volume of 385,337 transactions was achieved in 2004. Ten years later the national figures are therefore 32,7% or approximately one third below the boom time peak. For estate agents this is of interest, as we know that the number of registered estate agents has dropped from over 90,000 in 2004 to approximately 30,000 currently. The agents that remain in the industry are actually busier now than what they were during the 2004 peak period. When we consider the actual Rand value of transactions concluded by individuals in South Africa during 2014, presented by FNB as being R203.99 billion, this is not far below the Rand value peak of R218.47billion achieved in 2007. If we "deflate" the Rand value of sales by the CPI inflation rate to get what we term the real value of sales, the overall scenario appears more modest.

The 2014 sales in real value terms were R91.69 billion versus the 2007 sales in real terms of R152.23billion. With 2014 sales values in real terms being -39.8% lower than in 2007, the market on a national level is smaller today than during the boom years. The recent flattening out of the growth in sales volumes does reflect the overall economic growth trend on a national level. Is it possible to buck the trend on a regional level?

Our Seeff Dolphin Coast office has shown that this is possible within our area. For 2014 we concluded 106 sales transactions at a nominal value of R312,6m translating into a sale concluded every 3,4 days. For the first half or 181 days of 2015 we have concluded 72 sales transactions at a value of R256,3m, which is one sale every 2,5 days. If we add the 62 rental contracts concluded in the first half of this year we can claim concluding a property related transaction every 1,4 days.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com