If
there is one good reason to own a holiday home in KZN it is the month of May.
Unmatched in terms of weather, we enjoy the best of the sunny mild conditions
while the rest of the country starts to realise that winter is here. Selling a
property in KZN in winter is possibly even better than summer and the seasonal
aspect of marketing a home is a non-issue for us. Our Seeff Dolphin Coast
office is currently leading the sales race for KZN and is firmly positioned as
a top ten Seeff branch nationally. We are enjoying the results of a surge in
buying by people migrating into our area from Gauteng and Pretoria suburbs and
from the suburbs to the south of Ballito as people make the decision to move
northwards. This is the natural path of expansion given that Umhlanga Ridge
represents the new town centre and business hub and the airport makes commuting
convenient and a reality for many people living on the north coast.
Prices in
any market reflect a host of information and buying behaviour. Tracking prices
therefore becomes an essential part of monitoring our real estate market. The
commercial banks in South Africa provide the best statistics on home prices and
it is often instructive to review the house price indices of the main banks to
get a sense of current and expected future market activity. FNB’s published
house price index recorded year-on-year growth of 8% in April 2014 , slightly
down on the 8.1% recorded in March 2014. The growth figures for the preceding
two months were 8.3% and 8.5% respectively. Once we adjust for CPI inflation
the real house price growth is 1.93% for March, down from 2.3% in February
2014. Our inflation rate is currently 6.05%. House prices reflect the demand
and supply of property. As demand increases and the supply is constrained to
represented shortages in the market, prices react quickly to balance the supply
with prevailing demand. Increases in prices therefore indicate improving market
conditions and the current levels of year-on-year growth are the best we have
seen since April 2008. From August 2008 through November 2009 negative growth
rates were recorded and the very slow and gradual improvement has only occurred
since December 2009. The levels we now
see are by far the best we have experienced over the past 6 years.
The
economists are now pointing to slower rates of growth and warning that this
could indicate a tighter property market in the second half of 2014. There are
a few indicators supporting this view. The SARB leading business cycle
indicator showed a -2,8% year-on-year decline, which as we know is incredibly
closely correlated with mortgage extensions and property sales. The number of
insolvencies recorded has risen suggesting a mild deterioration in household
sector credit health. New car sales are often quoted as a good leading
indicator of general economic activity. The April 2014 sales volumes figures
published by the national association of automobile manufacturers of South
Africa fell by -10.6%. So while there are warning signs on the horizon of
potentially tougher times ahead, the property sales figures we are reporting
are at an all time high. This activity therefore seems counter cyclical and
subject to change. We see that on a national basis our average time that a
property remains on the market has declined to 13.6 weeks (from 15.3 weeks in
Q4 of 2013), that the percentage of properties sold at less than the asking
price has decreased to 81% (from 85% in
Q4 of 2013) and that the percentage of properties on the market for 3 months or
more has declined sharply to 66% from 74% in the last quarter of 2013. These
are significant improvements and point to a far more active property market.
Published in The Bugle, 21 May 2014, Author: Andreas Wassenaar
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