Whatshot
Property Talk
Property Talk
Date: 2018-07-27
I had the opportunity to attend a presentation by leading South African data analytics group Lightstone this past week which was relevant and interesting to what estate agents in general are experiencing on the ground across the country.
The staggering statistic presented was that the average number of properties (full and sectional title) traded in the first half of 2018 came to 24,372 a month. This is down by 10% from the average 27,072 a month recorded in the deeds office last year. It's the lowest level since 2010, when housing sales in SA slumped to 24,645 a month.
This was dramatically down by approximately 40% from the boom period experienced from 2005 - 2007. The reduction of 10% in sales volumes may not sound like much, but it is hugely impactful on the industry and has implications not only for estate agents, but also for conveyancing attorneys and a host of vendors that provide services to the residential property market.
I found it unsurprising therefore that the Financial Mail recently ran a feature article on the state of the residential property market and what we can expect for the remainder of 2018.
The brief "Ramaphoria" induced spike in the housing activity experienced earlier this year, according to the Financial Mail, has been followed by a period of renewed pressure on house prices. The housing market has shown overall decline in both price growth and transaction volumes. The 2009 recession, and resulting decline in property sales that followed in 2010, is often quoted as being "rock-bottom". We are currently experiencing the same levels.
The Lightstone data shows a steady decline in house prices since 2014, reaching a six year low of 4% in the second quarter of 2018. The FNB data similarly shows that the national house price index grew by only 3,4% in the first 6 months of 2018, which is below the average 4,2% recorded in 2017.
What I found of particularly interest, and what we can attest to in our local area of Ballito and surrounds, is that the upper end of the market has been hardest hit, with homes selling for more that R1,5m having slowed to only 1% price growth. For those of us who service the real upper end of the market in destinations such as Zimbali Coastal Resort, the R15m to R20m bracket is trading at figures of 10-15% down in price. The R30m plus bracket has produced no recorded trade this year to date.
Given the long term nature of property ownership, a lack of confidence can immediately translate into fewer sales as investors decide to hold back in order to wait and see what the outcome is likely to be. All of this means that we are in the best buyers market that we have experienced in almost a decade. If you are both a seller and buyer, what you lose on the swings you will make up on the roundabouts.