19 Dec 2011
South African property prices showed positive year-on-year growth in November for the first time since August, according to a report by ooba.
The November oobarometer price index revealed that the average house price rose 2.4 percent year-on-year (y/y) to R840 316 from R820 818 a year earlier.
Month-on-month property prices increased by 2 percent in November.
The growth in the average purchase price among first time buyers grew y/y by 12.4 percent to R639 143 in November 2011 from R568 703 a year earlier.
Saul Geffen, chief executive officer of ooba, says residential property prices are likely to continue to drift sideways in 2012, impacted by poor economic growth, resulting in negative real growth in property prices.
The report showed a 3.6 percent increase in the average approved bond size to R724 495 in November from R699 301 a year ago.
The average deposit decreased by 6.8 percent to R115 821 and the average deposit now is equivalent to 13.8 percent of the purchase price.
The initial bank decline ratio has increased by 3.3 percent y/y to 49.2 percent and the approval ratio decreased y/y by 6.5 percent.
The ratio of applications declined by one lender but approved by another decreased by 8.7 percent in November to 24.2 percent.
Geffen says the latest data show that the number of home loan applications during November 2011 increased by 36 percent from November 2010.
He notes that the value of approved loans in November were the highest recorded since May 2008.
Geffen says the reduction in interest rates of 650 basis points since 2008 has improved affordability and reduced the cost of servicing a bond significantly.
He adds that the record low interest rates, coupled with subdued property price inflation, increased bank approval rates and lower deposit requirements and increased bond sizes, will continue to positively influence the property market.
Some buyers and investors may have been affected by the recession but not those buying in the upmarket established suburb of Bryanston in Johannesburg.
Dating back to the 1940s, Bryanston has always been a sought after area among property investors, says Glenn Norton, broker/owner of RE/MAX Masters.
Norton says the demand for property in the area has remained fairly constant even through the recession period.
Buyers are reportedly now looking for homes on smaller stands in secure, boomed sections where some minor renovations are needed.
“There is currently a trend in the area of younger buyers purchasing older, more dated homes ,” says Norton.
Norton explains that the demand for property in Bryanston is due to the investment potential that the area offers to buyers.
Property buyers and investors have the opportunity to purchase a home in a good address and affluent area, which offers them lifestyle benefits and exclusivity, while properties still provide excellent value for money.
Bryanston is well maintained adding to the appeal, it is secure and is close to Sandton.
Many first time buyers that purchase homes in Bryanston tend to stay within the area when they move on to another property, says Norton.
Norton says there has been a substantial amount of new developments in the area, such as the cluster and high density complexes along Grosvenor Road, Main Road and William Nicol Drive.
Apartments in secure, high-density complexes are generally popular with single, young first time buyers, modern up-market clusters with good security are popular with the professional executives, and large properties on big stands are popular among families looking to upsize.
To own a home in Bryanston, expect to pay from R450 000 to R40 million for an entry-level studio apartment to a luxury home.
Norton says that while demand has remained constant, property prices in the area have not.
“The prices achieved in the area have definitely seen a drop from the original asking prices, especially in the high end of the market where prices have dropped by as much as R1 million plus.”
Buyers know the market and are not prepared to pay close to asking price especially if the property has been on the market for an extended period of time.
This has opened up the property market to more buyers who may not have been able to purchase here in the past, she says.
Many homeowners in Bryanston have considered sub-divisions as an option to make sales more attractive and give more value to a property.
“Bryanston remains one of the most sought after suburbs in the Gauteng and will continue to be a sound investment option for buyers in the future,” says Norton.
According to Errol King, Rawson Properties franchisee for Muizenberg, property prices are still among the most reasonable in the Cape Peninsula and significantly lower than most in the Southern Suburbs of Cape Town.
King says the diversity of homes on offer here is without equal anywhere in the Cape’s middle class precincts.
As an example, a freehold two bedroom house in The Breakers, a secure village is priced at R450 000 while a five bedroom is priced at R2 495 000.
Muizenberg is one of the few genuinely middle class Peninsula precincts where it is still possible to purchase a three bedroom house in good condition for R1 million, with one or two bathrooms on a plot 440 to 490 square metres in size.
He explains that according to PropStats and Lightstone surveys, Muizenberg has high sales activity in the R450 000 to R800 000 price bracket many of which are new townhouses in False Bay coastline projects.
Unit sales are down this year by 50 percent in the sectional title sector and by 35 percent in the freehold, but values are 30 percent up in the former and roughly 15 percent in the latter.
Leisure property buyers in KwaZulu-Natal are now financially stable and taking advantage of lower prices.
Lorraine Kirsten, broker/owner of RE/MAX Team, which operates in the KwaZulu-Natal town of Ladysmith and surrounds says there is more activity in the R1 million to R1.7 million price bracket as these properties are more affordable.
She says there are some good property purchase options available to those looking for an investment opportunity including a backpackers’ lodge in the Drakensberg on the market for R6.75 million.
Inkosana Lodge is situated in the Northern Drakensberg area and is a great place from which guests can explore the entire Drakensberg and Battlefields region or just take time out to relax.
The lodge lends itself to conversion to a luxury resort featuring an eco-pool, yellowwood walk and formal herb garden complete with summerhouse and fountain, says Kirsten.
Kirsten says that Inkosana lodge boasts a four-star rating and has won the South African AA Travel Award for backpackers.
It is still in the AA Hall of Fame and is acclaimed in all overseas travel guides.
“The Drakensberg region is a tourism hot spot and Inkosana Lodge is ideally placed to take advantage of the scenery and adventure this region has to offer visitors,” she says. – Denise Mhlanga
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Denise MhlangaProperty journalist at property24.com
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