|Reports of a national cooling down in the top end of the residential property market may be true, but in the case of Durban’s super luxury markets of both Kloof and Umhlanga the recent decrease in sales volumes appears relatively minor, only apparent in certain price categories and not a result of bubble condition or even waning market faith. |
Estate agents this week unanimously blamed the slowdown in the shrinkage in the number of active investors; market rebellion peaking at over pricing and the slowdown in upgrading particularly among middle management or small business owners nervous of rate hikes. The emphatic general consensus was not that of a slowdown in the two suburbs, but of a market settling into normal trading patterns.
Some psychological rather than financial influence was believed by Tony Dennyschene, principal of Acutts Umhlanga, to be having a minor negative effect but this was on knock on effect from the June 8 interest rate increase. Although well off the market highs of two years ago when some property prices doubled in 18 months, Dennyschene says the market is still very active below R1 million and only a little less so throughout the price spectrum. Only resistance he cites is in the mainly mortgage driven R1,8 million to R2 million price range – “but if priced right they sell.”
In the R5m to R6m price range Umhlanga’s turnover shows no slowing with the customary high percentage of cash sales just as firm as banks willingness to grant bonds of R70 000 monthly repayments.
Greg Harris of Lighthouse Properties reports a slowdown in demand but activity still firm in the prime beachfront apartments with deals requiring more effort to close. In keeping with other holiday periods he anticipates a market improvement at Christmas.
June’s Umhlanga sales of 14 units ranging in price from R735 000 to R9,8 million for the local Sotheby’s franchise set another record for that office. Further sales valued at R12 million await confirmation for the same month. Franchisee William Campbell, who reports a 400 percent first half increase in sales over the same period of last year, dismisses any suggestion of a slowdown noting that any property perceived as being well priced will sell.
Pricing, at least of brand new units, could become even more competitive according to Dennyshene who expects more boom driven investors to start offloading as their units are readied for them to take transfer.
The bandwagon rush of a year or so ago has given way to greater selectivity by purchasers in Kloof, but the desire to reside in the well-wooded swanky suburb has lost little of its traditional eagerness.
As in Umhlanga, purchasing decisions are taking longer, especially in the R2 million to R3 million, which is driven to some extent by self-employed upgraders, but interest up to and at the super luxury end remain active. Clarke, who concluded sales of R3,5 million and r3,2 million in recent weeks and a R10,5 million transaction in April, says Kloof’s buyer appeal remains in its older homes, large stands and good schools.
Dave Jones of Acutts Hillcrest also reports good activity above the R4 million mark in Kloof and Hillcrest, but a slowing down, or “normalising” in the R2,8 million second hand market. A recent trend is that of people relocating to Hillcrest from Umhlanga, La Lucia and Mount Edgecombe targeting upmarket cluster homes in the R1,8 million to R2,5 million.
Townhouses in the R1,5 million price, according to Jones, are still in over supply. With an average of 80 showhouses every weekend in the second hand market on show every weekend in Hillcrest and Kloof, Jones says sellers should note that comparison of product is a key driver in buyer decision making. Pricing is therefore critical as is the general condition properties.
The delivery frequency of new developments has slowed although interest in the area is now being shown by ex Ballito developers, some of whom, Jones says, appear more adventurous than local developers. He forecasts an average year on year price growth of 12 to 14 percent for the area.