Pricey Umhlanga still strong

Positive input from government, a reduction in interest rates, and the creation of a stable economy for off-shore investors head the wish lists of some of Umhlanga's eminent real estate principals.

These include Greg Harris of the Lighthouse Property Group, William Campbell of Lew Geffen Sotheby's International Realty in Umhlanga, Chris Pearson of RE/MAX Address and Sipke Beyl of Habitat Real Estate.

They say that activity in the north coast suburb, one of Durban's most expensive, has continued at a sustainable pace despite the prime and mortgage rates having rocketed up by a cumulative 500 basis points since June 2006. However, while the general feeling is that the turning point for the current interest rate cycle is imminent, consumer confidence could do with some additional reinforcing.

Campbell says the market is showing signs of emerging from what he refers to as "the perfect storm".

"I am seeing a definite upswing in the market defined by the emergence of a new group of end-user buyers and investors. Referrals from within our group's local and international offices are firing up as people realise that the market is cyclical and that the time to make a profit from real estate is when buying it, not selling it. That's why the time to buy is now."

Pearson is also witnessing an upturn, and cites improved show house attendance as an indicator. Should the Reserve Bank's decision to leave the interest rate unchanged last month herald the start of a rate downturn, he's optimistic enough to anticipate activity growth of around 5% per month going forward.

"The interest rate, which went up slowly, is expected to drop a lot more quickly. This, coupled with the recent cut in the price of oil, could see enough confidence come back into the market to start driving up house prices from the second part of 2009."

"It's difficult for buyers to accept that now is the right time to buy. Yet, the reality is that what they purchase today for R1,5m is probably going to cost them R2m or more by 2010. Buyers now will take advantage of the current situation where sellers are accepting between 10% and 30% less than their asking prices, but this state of affairs is not going to last."

Greg Harris, whose Umhlanga buyers comprise a large number of investors at the moment, also says the market is improving, albeit slowly. "It's going to take time to turn around properly but as it does, buyers will filter back into the market place."

Most buying interest is in the R1,5m to R5m price range, he adds, pointing out that an entry level property in Umhlanga now starts at around R1,5m, which will probably buy a two bedroom, two bathroom apartment near the beach but without views.

At the top end of the market is a beach-fronting penthouse, which his company is marketing at R12,5m. Boasting four en-suite bedrooms, it's a duplex penthouse right on a residential beach.

Wade Latham, residential sales manager of the Umhlanga branch of the Lighthouse Property Group, says it's just as likely to sell to a South African as an overseas buyer. "Growth in the prime beachfront sector is difficult to determine since price is often driven by supply and demand. The number of top location apartments available on the market at that given time is a major influence on price."

"Our beachfront real estate market is still strong and selling well. Since there are only a handful of really exclusive penthouses and apartments in Umhlanga, clients, when they find something to suit their needs, could be prepared to pay more than it's worth. We have a continuous stream of buyers looking for that sort of investment. At the end of the day, it's all about a willing buyer and a willing seller, and supply and demand."

Having recently returned from a month in Canada, Sipke Beyl says South Africa's property market appears to be in the better shape. "The economic outlook there is worse than ours, one reason being that tourism has fallen dramatically. Also, the timber industry, which relies on the housing market because houses are built with timber, has seen a dramatic decline. Mills are closing down and there are no other jobs for many of these people."

"Here in South Africa, things seem to have livened up and there is certainly more interest from buyers, although in many instance these are bargain hunters. But I feel a heightened sense of optimism from the agents, who all seem to be busier."

Related articles