Now is the time for new development

The residential property market in Johannesburg is a bit like a hot air balloon tethered to the ground at the moment – and the only thing that can really set it free to fly is lots of new development.
“Sales volumes should be soaring as demand from buyers is huge,” says Lew Geffen, chairman of Sotheby’s International Realty in SA, “but there is shockingly little for them to buy, particularly in the upper sector, because existing homeowners are not upgrading and so not releasing stock into the market.
“This is especially true in the more established, central suburbs, where owners now often tell us they would much rather renovate or add to their current homes than buy a bigger or more luxurious property.”
At the same time, he says, the shortage of supply is causing a “price push” that is giving existing owners even less incentive to sell. “Prices are currently about 35% ahead of where they were after the 2008/09 recession and starting to move up even faster now, so many owners who bought in the past five years are happy to hang on now and watch their investment grow very nicely.
“In our own group, for example, we have seen the average home sale price rise by more than 14% in the past 12 months to R3,2m, following an 8% rise in the previous year.And yet we have buyers literally queuing up for anything that does come on to the market in these areas, which have come back into vogue in recent times as people have grown increasingly weary of long commutes to outlying suburbs and traffic congestion.”
In fact demand is such, Geffen says, that buyers are also currently pouncing on any new development that comes on to the market in a sought-after area, even though the homes in these developments generally come at a premium of about 30% compared to existing homes.
“Upmarket units in Johannesburg are currently selling at around R30 000/sqm, compared to around R18 000k/sqm five years ago, but buyers are scrambling to buy them off-plan and in many instances even before the project can be officially launched. We are also starting to see investors come in and buy two or three units at a time.”
This has certainly been the case, he says, at Le Cirque, a 450-unit super-luxury apartment development in Illovo which is already more than 60% sold out just a few weeks after being launched.
“Consequently I would like to say to developers that their time has clearly come again – and that those who are able to get new projects ready and out of the ground in the next three years are really going to be in the pound seats.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us