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Don’t go overboard, coastal sellers advised

House price growth in SA’s coastal regions is at last back in positive territory, for the first time in more than two years, according to the latest research by Absa.
 
However, says Richard Gray, CEO of the Harcourts Real Estate group, sellers in these areas should not take this as a signal to raise their asking prices, “because there are many other owners who have been waiting for just this moment to put their homes on the market. And as they do so, we expect the increase in the number of homes for sale relative to demand to put the lid back on price growth, at least for the next few months”.
 
In fact, he says, those who seriously want to sell now should be looking for ways to take advantage of the current increase in demand as quickly as possible, “by enlisting the help of a dynamic agent to help market their property, and by being open to negotiation on price when a buyer shows interest”.
 
The most recent Absa Housing review shows that prices in SA’s coastal regions grew by an average of 5,2% in the June quarter – and by an impressive 15,6% year-on-year. “But although the North Coast of KwaZulu-Natal recorded a whopping 42,7% in the past 12 months to become the best performing area, it is important to note that this was mostly the result of an increase in the demand for primary homes therewith Durban’s commercial and industrial sectors moving north to be closer to the new international airport and trade zone.
 
“And we have observed a similar trend in other coastal areas where the number of permanent residents and investors (rather than holiday home buyers) is increasing due to retirement, relocation for lifestyle reasons, or a rise in rental demand close to new capital projects.
 
“Towns such as Hermanus, Amanzimtoti, Mossel Bay and Blouberg come to mind in this respect, and we believe it is the heightened activity in such areas that is really driving coastal home price growth,” says Gray.
 
The Absa figures also reveal that the Western Cape’s Peninsula & False Bay area has done well, notching up an average year-on-year price increase of 16%. It was also the best quarterly performer with an increase of 6%, followed by the South Coast of KZN with 5,6%.
 
“Overall, the only coastal area where price growth has not turned positive in the past quarter is the West Coast, but we expect this situation to change very soon because the proposed Saldanha IDZ is already boosting property demand in the area – once again for permanent or long-term rental homes rather than holiday homes.”
 
Meanwhile, he says, the latest FNB statistics on what it calls “holiday towns” shows that although sales are increasing in coastal areas, overall volumes are still only 32% of what they were during the last property boom, while those in the major metro areas are back up to the 52% level.
 
“This underlines the fact that many coastal towns and villages are still very dependent on second-home buyers,and the danger for sellers in reading too much into reports of substantial price increases along the coast as a whole. There is higher demand, but it is concentrated in certain areas at this stage, and those who hope to sell soon really should enlist professional help to ensure that their asking price is correct for their local market.”


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