DURBAN (August 08) - The number of unit sales may have dipped in the Greater Durban area in the past year, but the average selling price has increased across the board with some suburbs recording extremely healthy capital gains, according to data released this week.
Second quarter results for 2007, released by PropValues on the back of the recently-promulgated new National Credit Act (NCA), make for some interesting real estate comparisons in the greater Durban area.
Ross Sibbald of PropValues, says the latest sales figures, which compares the second quarter of 2007 to the second quarter of 2006, show that the average selling price in the greater Durban area has increased across the board, with “extremely healthy capital gains”. However, he points out further that unit sales in many zones were down in the second quarter of 2007 compared to the same time period last year.
Sibbald attributes the drop in unit sales to a series of market-impacting events that started with an upturn in the interest rate in mid-2006. Rising house prices, additional rate increases, the public sector strike of June this year, the implementation of the new credit legislation and fears of an additional rate increase have all affected buyer confidence and affordability, he says.
According to Sibbald, the report shows that only the Berea, Durban CBD/Beachfront, Monclair/Yellowwood Park, Phoenix/Verulam and the Upper Highway residential zones recorded increases in sales volumes for the second quarter of 2007. PropValues’ other zones, which include Ballito, the Bluff, Durban North, Pinetown, Queensburgh, Umhlanga and Westville, although all showing healthy increases in their average selling prices, all experienced reductions of between 7% and 50% in unit sales compared with the same period in 2006.
Sibbald says the market has entered a period of respite after its manic performance of the last few years. Rather than seeing the current lag as cause for concern, however, he anticipates that an upturn in activity is just around the corner. “I believe that Durban’s residential property market is headed for additional growth in the lead-up to 2010 FIFA World Cup and beyond. On top of this, expatriates returning to South Africa are seeing value for money in local properties and investing accordingly, which is also stimulating growth.”
Even though Ballito as a zone had been most affected in terms of reduced unit sales, its average selling price increased by 30% and was now averaging just over R2m. Sibbald believes its slow sales volumes are largely the result of the damage caused by the March tidal waves, which affected not only property but also buyer confidence. “That said, a property on the Zimbali Estate recently sold for R29,5m and a flat in Chaka’s Rock changed hands for R10m,” he notes.
Sibbald says feedback from PropValues member agencies, many of whom have reported excellent second quarter results, is that the new credit extension legislation is playing a role in slowing market activity.
According to Sipke Beyl, managing director of Habitat Real Estate, says July was a record month for his Umhlanga branch. Reporting three sales in excess of R4 million last month, Beyl says all bonds have already been granted
In the Upper Highway residential zone the average selling price increased by 26% to an average selling price of R1,482m.