The mad scramble to purchase property on the Durban beachfront that saw prices rise between 30% and 100% a year is over. Sales volumes have dropped and price growth has levelled off sharply.
Denise de Villiers, principal of leading local agency Homenet DRM, says prices started to stabilise when rentals failed to accelerate at the same rate as selling prices and existing investors begin to feel the pinch.
In addition, demand from new investors has dropped. The seveninterest rate rises since June last year have made buyers more cautious and the National Credit Act is also contributing to a decline in sales as in some instances prospective buyers fail to qualify for financing.
Nevertheless, interest in Durban beachfront property is still very evident. De Villiers says smaller units such as bachelor and one bedroom flats, "and anything priced between R280 000 and R400 000", is selling well, still mostly to investors.
Meanwhile, the hype surrounding the 2010 Soccer World Cup and the expected influx of tourists has raised a lot of questions among investors and other members of body corporates and shareblock companies about whether holiday letting will be permitted and on what basis.
De Villiers explains: "Most of the buildings on the beachfront are residential and in terms of their conduct rules, Annexure A or Use and Occupation Agreements, stipulate the terms for leasing units and generally do not allow holiday letting.
"So it is worth looking beyond 2010 and the effect on the property market in 2011 and what forecasts and predictions can be expected after the tourists and fans have left."
In this regard, the efforts being made to combat crime and grime on the Durban beachfront are positive despite the fact that there are several derelict buildings needing urgent attention. De Villiers adds that the ongoing work includes the upgrading of roads, which is helping to improve and address some of these concerns.