He says that while demand for property was slightly depressed during the recession period, for the most part, the Pretoria East property market has remained constant. “This area has proven to deliver a good return on investment for property buyers, which is largely due to its excellent location in terms of proximity to important amenities. There are good schools in the area, along with a university, superb shopping malls and the Gautrain Station situated in Hatfield. The area also has a certain status that appeals to buyers looking to live in and around the upper echelon of society,” says Potgieter.
According to Potgieter, sales transactions in 2011 have had their ups and downs, but have remained fairly steady overall. “Trends in the market have been very difficult to predict and there have been a few driving factors that have had an influence on market sentiment such as political and economic uncertainty. As soon as rumours circulated of a possible double-dip recession approaching, demand reduced,” says Potgieter.
He notes that Pretoria East can be divided into two regions: one area consists of Waterkloof, Brooklyn and Menlo Park all of which is affectionately known as the Old East, while the New East consists of Faerie Glen, Moreleta Park and various security estates such as Silverlakes, Woodhill and Boardwalk Manor and Meander. Potgieter says that it seems as if the suburbs in the Old East have been less affected by the recession as houses are selling for prices that are similar to those achieved in 2008. However, properties in the New East have reduced in price and in some cases are selling for up to 25% less than they did in 2008. “Sellers that have not reduced their prices simply do not sell.”
Entry level homes in Pretoria’s eastern suburbs range between R800 000 and R1,5 million, while mid range homes fall within the R1,5 million to R2,5 million bracket. Top end homes range from R2,5 million to as much as R16 million, depending on location, features and fixtures.
“All properties below R1,5 million, provided they are in a good condition, achieve a good return on investment in the New East suburbs. However, properties listed above this price bracket are taking a very long time to sell. There will always be demand for reasonably priced properties,” says Potgieter, “which can be defined as those properties priced similar to or less than the average price per square metre of comparable properties sold recently in the same or surrounding areas.”.
It is interesting to note that many of the homeowners in the area have opted to renovate their homes rather than selling to purchase another more up-market property. While subdivision was a trend in the Old East suburbs in the past, most sub-devisable properties have now been divided. Properties in the New East are not sub-divisible as a result of smaller stand sizes.
He says that other factors such as the banks’ strict lending criteria have also put strain on the property prices. The fact that fewer buyers are obtaining the necessary finance to purchase property has meant that sellers have to reduce their asking price in order to conclude a sale.
Adrian Goslett, CEO of RE/MAX of Southern Africa, says that it is important for buyers to have cash deposits so that they will have a better chance of obtaining the finance. Most banks require a deposit of around 10% to 20%.
In addition, Potgieter says that since the introduction of the Consumer Protection Act buyers are far more aware of their rights. “Although the Act is not applicable to the majority of private sales nor to some administered by estate agents, buyers insist on a list of all possible defects in a property. Should it be found that other defects exist on occupation; buyers are adamant that defects are fixed by sellers prior to transfer,” says Potgieter.
What can we expect to happen in the eastern suburbs of Pretoria during the next 12 to 18 months? “I expect that house prices will start to escalate once again, provided that the US and Europe don’t experience a second recession which would have a negative effect on our economy overall,” Potgieter concludes.