18 Apr 2008
Sales data just released shows prices are up in some Durban areas but slipping in others.
First quarter Durban property sales data released this week underline the corrosive effects on the residential property market from the nine month old National Credit Act and the nine interest rate increases since June 2006.
Figures for the first quarter of 2008 compared to the first quarter of 2007 for Durban's 12 selling regions were collated by PropValues, which monitors KZN property values and trends, confirms the general increase in the number of days from listing to selling; the slowdown in actual sales and a marked decrease in house price growth. The figures, however, according to Ross Sibbald, director of PropValues, also emphasise that year-on-year activity still remains fairly stable in the more affordable markets.
Durban CBD/Beachfront, Durban North, Phoenix, Pinetown, Upper Highway, and Westville Residential Zones all recorded a year-on-year increase in average selling prices with the most significant coming from Westville with a 19 percent rise from R1 199 430 in the first quarter of last year to R1 424 891 in the first quarter of this year.
By comparison, average selling prices in the Berea, Bluff, Queensburgh and Upper South Coast all slipped from those recorded in the first quarter of last year with the largest dip of eight percent registered in Queensburgh from an average selling price of R729 871 for last year's first quarter to R685 943 for this year's first quarter.
Umhlanga's average selling price recorded a one percent rise from R2 031 417 to R2 050 084 for the same period, but the number of units sold fell substantially.
Biggest surprise in the data highlighted by Sibbald, and also blending in with reports of strong lifestyle driven cash sales in the area comes from Ballito's average selling price surging by 41 percent from R1 701 702 to R2 381 341 for the period under review. However, sales in number of units sold and total rand values in Ballito declined substantially.
Of the more affordable markets, Sibbald says Phoenix recorded the highest average selling price increase with a 16 percent rise from the first quarter of last year to the first quarter of this year followed by Pinetown with an eight percent rise. However, Mike Bennett, CEO of Proprop, believes Pinetown's increase has been distorted to some extent by the large number of buyers lowering their purchasing ambitions because of shrinking affordability from houses to more expensive flats. If these numbers were removed from the equation a more accurate assessment in his view is that of Pinetown prices moving sideways, but with a definite softening in certain suburbs.
One market to buck the general decline trends was in Durban North where the average selling price grew by five percent from R1 548 769 to a R1 629 754. Total number of sales in gross rand value increased while unit sales and number of days listed paralleled those recorded in the first quarter of last year. The stableness of this market is confirmed by Grant Gavin, broker owner of RE/MAX Panache, but he links the constancy of the market to Durban North's traditionally proven soundness of investment in softening markets.
Its current resolute market strengths have also been underpinned by the ongoing "quite magnificent" commercial development of the Broadway spine: good range of schools and properties that still lend themselves to renovation without fear of being over capitalised by their new owners even in this market.
Sibbald is mildly optimistic of conditions improving in the third quarter, based on "some serious and ongoing realistic adjustment taking place in sellers' asking prices," and the gathering swing towards rentals driven by home loan thwarted buyers.
"Conditions are definitely moving toward favouring the buy-to-let investor, but there's still some hesitancy because of doubt that the market has actually bottomed out yet. But, once definite signs emerge that it has, or is about to regain positive territory, we expect to see the start of a recovery."
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