Andrew Golding: Recently, Dr Andrew Golding, CE of the Pam Golding Property group, addressed members of the media regarding the latest trends in the residential property market, and we thought you may find his insights below of interest. Dr Golding pointed out that the state of the property market tends never to be static with this year no different and reflecting a number of new emerging trends. The first and probably most significant of these is the fairly rapid change from stock over-supply to stock shortages. At first evident in only a few areas within suburbs, but now widespread across all of the major metropolitan centres of the country, this trend began to emerge at the end of last year (2012), but really only developed fully in the past six months. The question is whether these stock shortages are a precursor, as they normally are, to a new phase of real house price growth. There are a number of reasons why one could believe so - historically low interest rates, some pent-up housing demand generally in the system and perhaps most importantly, some renewed vigour and appetite for mortgage lending by the major banks. However, counteracting this view is the still fragile state of the economy, the relatively high levels of consumer indebtedness and the fact that from a political perspective there is a general election looming. Nevertheless we remain cautiously optimistic that we will in fact see some real, albeit modest, house price growth next year (2014), for the first time since 2008. Over the past 12 months the housing market performed pretty much in line with expectations, characterised by slow and steady improvement. According to analysis by Lightstone, house prices nationally experienced an average seven percent year on year growth to September 2013, with a CPI rate of six percent. Sectional title price growth overtook freehold in March this year and has enjoyed a stronger growth rate over the period since then, with sectional title growth standing at 7.7 percent year on year and freehold six percent. Interestingly, coastal properties slightly outperformed non-coastal properties at 6.7 percent versus six percent year on year, while the low end affordable market continued to perform really well with double digit growth rates throughout the year. As far as Pam Golding Properties sales are concerned, to date we have achieved sales value (in rands) which is up by 21 percent year on year, while our sales volumes (units) have increased by 15 percent over 2012. Currently our average selling price for 2013 is R1.823 million, up from R1.736 million in 2012 - this versus a national average for the industry of about R900 000. Within the Pam Golding Properties sales environment, the greatest demand for homes across the various price sectors is by far that between R500 000 and R2 million, accounting for 34 percent of the total in rand terms and growing by nine percent. Over and above this, there has been a notable increase of 37 percent in PGPs sales activity in the price ranges from R3 million to R5 million, a somewhat more modest increase of 10 percent in the price band from R5 million to R10 million, and a marked increase of 60 percent in the top end of the market from R10 million upwards - the latter due to the fact that this high net worth sector was by and large able to sit out the economic recession. Some noteworthy high end sales by PGP during the calendar year to date included the sale of a R110 million home in Fresnaye; a luxury penthouse apartment in Bantry Bay sold for R34.5 million - the highest price achieved for a sectional title unit in this suburb in the past five years; an apartment in Melrose Arch in Gauteng which sold for R24.561 million; and a house in Knysna on the Garden Route which sold for R23 million, among numerous other sales in excess of R20 million for residences on the Capes Atlantic Seaboard and Boland region. Speaking of high net worth buyers and re-emerging trends, while sales to international buyers are only a tiny fraction (less than one percent) of total sales annually across the market, we have noticed a return of the international buyer to the market. Our sales to overseas buyers still remain a very small percentage of total group sales (3.54 percent in terms of volume ie units) but the extent of South Africas global appeal is evident in the spread of over 45 countries from around the globe which are represented among our international buyers. Live, Work, Play Other trends which have either evolved or simply continued include the move towards owning a home which offers both a desirable lifestyle and is within easy reach of transport hubs such as the Gautrain and/or bus routes. Vibrant, revitalised nodes or brand new nodes are gaining in popularity such as Melrose Arch in Johannesburg, Gateway in uMhlanga, KwaZulu-Natal, Maboneng Precinct in Johannesburg and Cape Towns central city and Woodstock inner city regeneration nodes. The leisure market appears to be adjusting to market conditions and while there is still an over-supply of stock this sector of the market appears to be seeing the start of a slow recovery. For coastal buyers, areas such as Knysna, Plettenberg Bay and St Francis Bay offer sound value for money and high lifestyle appeal. The Karoo and Kalahari, with their picturesque and historic towns and architecture, remain popular among those seeking a more leisurely, country or rural lifestyle or to simply get away from it all. While the trading conditions in the market remain challenging we do feel the property market has entered a new and more positive phase, including the ongoing re-entry of developers into the marketplace. We are optimistic that these improving activity levels will be sustainable and mark the beginning of another cycle of positive house price growth.
Posted on: Thu, 05 Dec 2013 06:03:28 +0000