12 Jun 2013
The residential property market continues to recover gradually and despite still being constrained by a strict lending climate, certain segments of the market have shown relatively good levels of activity over the past year.
This is according to Carol Reynolds, area principal for Pam Golding Properties (PGP) in the Durban North, La Lucia and now also the Durban area, who says the Durban market seems to be emerging out of the recession, with renewed interest across most sectors.
One of the key factors playing a role in this recovery is the diverse appeal of the Durban market with its extensive price band which caters for everyone from first-time buyers to top echelon investors, with bachelor and one bedroom apartments at one end of the spectrum, and grand mansions at the other. This means that the buyer pool is large and stock is available at all levels of the market.
“At the lower end of the market, we are seeing a drive from the banks to facilitate first-time home ownership, and hence, as bond approvals for first-time buyers increase, so too do the sales in the under R1 million and R2 million price bracket.”
Reynolds says Durban offers a wide variety of entry level properties in this price range from sectional to freehold, thereby supporting first-time ownership. She says in addition to this high demand sector of the market, Durban offers buyers luxury homes in sought-after nodes such as upper Glenwood and upper Morningside, which fetch prices in excess of R5 million and R10 million.
At the top-end of the spectrum, Reynolds says, many high price band sales are cash sales, eliminating the need for intervention by the banks and this expedites turnaround times in the market place. If one considers today’s market in comparison to 2010 and 2011, there is an increased buyer appetite, possibly driven by the low interest rate and general instability across other financial markets, rendering property a more solid and stable investment option.
“Durban has benefited from the transformation of the beaches and the new promenades which have become globally renowned. KZN Tourism is promoting Durban and its coastline extensively, which has had the positive spin-off of a boost in security and cleanliness along the beachfront, creating an ambience which is desirable to the investment market.”
Reynolds says it is interesting to consider some detailed statistics from Lightstone as an indication of how certain nodes have been performing over the past year and a half.
“Morningside continues to be in high demand because of its proximity to excellent schools, the beachfront and CBD. Thirty percent of Morningside’s residential property comprises freehold ownership, while 70 percent is sectional title. In 2012, the average price for sectional title units in the area was R757 000 and in 2013, the average price to date has been R645 000, which means that prices are affordable and therefore the market continues to attract a large buyer pool.”
In Morningside, Reynolds says prices of freestanding homes averaged R1.9 million in 2012, and R1.9 million in 2013, showing the levelling of the price curve. She says there were 187 sectional title units sold in Morningside last year and 50 sales for 2013, and in the freehold market, there were 74 sales in 2012 and 20 sales thus far have been registered for 2013.
Reynolds says in Musgrave, statistics are quite similar, showing little or no price inflation, but consistent activity. In 2012, there were 260 sectional title sales in Musgrave and 56 freehold sales. To date, 2013 has produced 75 sectional title sales and 23 freehold sales.
The average price for freehold property in Musgrave was R1.5 million in 2012, and has been R1.3 million in 2013 – showing slight deflation, however, it is still early to make proper comparisons. Sectional title units have increased slightly in price, with the average price for 2012 being R860 000 and the average price for 2013 being R914 000.
According to Reynolds, Glenwood is also an interesting suburb to watch, as it too has excellent schools and infrastructure, with an artistic flair that has a unique appeal. She says Glenwood comprises 83 percent freestanding and 17 percent sectional title ownership. She says the average selling price for sectional title units in the area was R410 000 in 2012 and this has increased to R524 000 this year.
Last year, she says there were 69 sales with a total of R80 million recorded for the area and there have been 21 sales registered this at a total value of R20 million.
“One of Durban’s most consistent nodes, and indeed, one of the suburbs that has shown slight price inflation is Essenwood. With over 260 sales recorded in 2012 at a total sales value of
R300 million, this suburb constitutes a large and highly active component of the Durban market. The average selling price for freehold in the area is R2 million, which has been stable for the past two years. Sectional title units have increased slightly in price from R855 000 in 2012 to R936 000 in 2013.”
In the Point Waterfront area, apartments vary in price from one bedroom units at around R1 million to two and three bedroom units which generally fetch between R1.5 million and R2.5 million. At the upper end there are a range of exceptional penthouses on the market from R4 million to R6 million.
Reynolds says with its location on the seashore, the Point Waterfront offers an appealing holiday ambience, good security and spectacular sea views from most apartments. She says they are seeing interest in apartments to rent, mainly among young, career-minded tenants seeking to share an apartment and enjoy the beach lifestyle and convenient access to Durban CBD and key routes.
Rentals range from R7 000 to R8 000 per month for a two or three bedroom apartment, and depending on location and quality, some upmarket three bedroom units fetch rental returns of around R12 000 to R15 000, which offers value considering the units are generally brand new and the apartment blocks have swimming pools, beach access and excellent security.
“While it is always difficult to predict market activity for the forthcoming year, there is a sense that we are finally emerging out of a negative cycle into a more positive one. The banks are loosening their lending criteria and appear to have a better appetite for lending. One hundred percent bonds are being offered again, albeit to a select few A-grade clients.”
Reynolds says they have noticed an upswing in buyer activity this year, with show day attendance doubling on last year’s figures. In addition, well-priced stock is selling relatively quickly and turnaround times are averaging out at their former figures of 45 to 60 days.
She says in the price band under R3 million, stock is moving quickly, and they are seeing well-priced homes selling on their first day of marketing. In the more expensive price brackets, activity is slower and turnaround time is greater, but this is to be expected at this higher level where the buyer pool is much smaller, she says.
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