Ballito, Fast Becoming a Residential Town - Jawitz Properties

Ballito has shed its ‘holiday resort’ image and is fast becoming a popular residential town.  Quality of life, safe bathing beaches and easy access to the new airport, are enticing Gautengers to seek a better quality of life away from bustling cities.  

Prospects for the Ballito property market are looking up.  On the whole, the area has held its own through the recession and although there have been fewer sales than pre-2008, prices have not come down as dramatically as in other KZN areas. The market has been reasonably stable for the past year and levels are expected to remain steady in 2012. Supply and demand always plays a role in pricing as well as external factors such as the bank lending criteria and the economy.

“King Shaka International Airport has undoubtedly played a role in uplifting the area.  Commercial development, with easy access to the airport, continues to increase.  Many businesses are relocating to Ballito and with the construction of shopping centres and a new road infrastructure, growth is positive. This means increased demand for housing as people choose to live close to work,” says Keith Brown, Jawitz Properties’ principal franchisee.

By and large, the greatest value is still in the suburbs where homeowners pay less per square metre. Demand for older homes that need renovation has increased but there is a shortage of stock. Average priced homes sell within three to six months, but higher value properties over R3.5m take much longer. Again, this has not changed from a year ago although there has been a slight increase in buyers since the beginning of August 2011. Prices vary dramatically from suburbs to gated communities.

The average price for a three bedroom family home in fair condition is R1.9m. A renovated home of equal size can go from R3m upwards. As all the homes in the gated estates are new, they tend to start at R3m and increase from there. A two bedroom sectional title unit on the beachfront will cost anything from R1.5m upwards, depending on location and age of building.

“Market related priced property attracts interest from buyers and sells within four months of listing.  However, there are many properties which are still overpriced and struggle to change hands.  Gated Estates such Simbithi are highly sought-after and sales of land are on the increase.  The idea of designing and building their own home appeals to many buyers. Re-sales of homes in these estates are improving as more homes are built and come on the market. Once again, price plays a big role. Second home, sectional title still makes up over 60% of all sales, particularly those units along the beach front,” he says.

The lower end of the market up to R1.5m is the most active fuelled mainly by first time buyers who qualify for bank loans.  The middle sector, from R1.5m to R3.5m is faced with affordability issues and other disposable income debt, making it difficult to raise a bond. Sales in the upper end of the market are slow. Deals, when they do take place, are usually generated by cash buyers or bridging finance. 

Rentals are booming and long term rentals struggle to keep up with demand due to an influx of people migrating to the town. Return on investment is still low at between 5 and 6%, but with the current demand this is expected to increase over the next year.

“Typically, sellers always push for top prices and buyers are continually looking for bargains. Currently, the market is well balanced and sellers are having to face the reality that the banks’ lending criteria has not changed. They are, however, beginning to understand that if they want a sale, they have to get in line with market related prices. Property buyers, on the other hand, are far more realistic and open to negotiation,” he says.

Paula Neild is the Marketing Manager for Jawitz Properties South Africa. Contact paula@jawitz.co.za or call 011-880-3550. Jawitz Properties specialise in South African property for sale and property rentals throughout South Africa. Visit http://www.jawitz.co.za for more information.

RESIDENTIAL MARKET MIRRORS THE ECONOMY FOR 2012

The residential property market in 2012 will, for the most part, mirror the performance of the South African economy which is holding its own despite global trends and uncertainty remains as to the rate at which the economy may grow or contract over the next 18 months.

“The residential market is no different and given the current economy, it would be difficult to expect anything else. Price growth, even if in nominal terms only, is managing to hold its own given current economic volatility,” says Herschel Jawitz.

Current price growth is appropriate to the economy especially when issues such as disposable income, affordability and bank lending are taken into account. If property prices were to grow beyond current inflation, it may well reduce demand below the current levels based on affordability. Real price growth taking into account inflation is always first prize, but in the current economy it is likely to impact on affordability and inhibit demand.

“Banks continue to report soft demand in the market, but these are general statements and do not necessarily reflect the market as a whole,” he says. “Coastal leisure markets are under pressure and will remain so for some time as supply significantly exceeds demand.  It is not the same however in the metro areas, particularly in the price bracket up to around R3.5 million where demand, while not strong, is better than the banks’ research suggests. There is activity.”

“Interestingly, lending on cars, personal loans and credit cards is increasing at a much faster rate than mortgage financing.  Ironically, it would appear to be easier to get an unsecured loan than a mortgage loan secured by bricks and mortar.

Despite the fact that property prices and demand are sluggish, there will always be those, who for financial or emotional reasons want to buy and can afford to buy. In previous markets, the buy-to-break-even time-frame was about three years as opposed to the current five years.  Provided that buyers take a long term view, residential property will show real growth.

The whole issue of buying versus renting goes beyond a simple yield calculation. Home ownership forms the backbone of communities and families on both aspirational and social levels.  Yields, however, do not take this into account. “Even if property prices increase by only two to three percent per year over the next few years, the owner would have built up some equity - it may be small, but it’s a start,” he says.

This is supported by the fact that first time buyers increased considerably in 2011, versus 2010 and 2009 despite consumer indebtedness and the economy. According to FNB research, first time buyers made up 23% of buyers in 2011. This is important. First time buyers will ultimately support the overall recovery of the market from a demand and then price point of view. The recovery has to be ‘bottom up’ for it to be sustainable.

Jawitz cautions buyers must do their homework and make sure they buy at prices that reflect the market today.  Whilst there are no real bargains, this is definitely not the market to overpay for a home. For sellers, it’s about understanding the market and pricing the property accordingly. Homes are not taking four months to sell, sellers are taking that long to finally realise what the market is prepared to pay for their home. Every seller’s home is their castle but unfortunately the emotional value that owner’s place on their homes does not always equate to financial value.

“Patience will be a key factor in terms of a recovery in the economy and similarly in the residential market. Property prices will inevitably start to move, but it’s a matter of when.  In the meantime, with property prices at current levels and interest rates at historically low levels, the decision to buy now, with a long term view, is sound,” he says.

Paula Neild is the Marketing Manager for Jawitz Properties South Africa. Contact paula@jawitz.co.za or call 011-880-3550. Jawitz Properties specialise in South African property for sale and property rentals throughout South Africa. Visit http://www.jawitz.co.za for more information.

Camps Bay Homes No Longer Way Out Of Reach

With current selling prices for freehold properties down in both nominal and real terms (after inflation), Camps Bay property are no longer the domain of only the super wealthy, according to Francois Venter, Western Cape Regional Manager for Jawitz Properties.

According to Lightstone, which tracks deeds office registration figures, the average price of freehold property has decreased from R7 437 000 in 2009 to R5 480 000 in 2011, a decrease of some 26%. "Current selling prices are almost on par with those prices achieved of 2006," says Venter.

Camps Bay has always been a desirable area because it offers the benefits of a coastal lifestyle combined with its proximity to the city and shopping areas like the V&A Waterfront. During the previous property boom, property prices were inflated by foreign buyers taking advantage of the highly favourable exchange rates that prevailed. But with the rand strengthening to current levels, and the onset of the global recession, foreign buyers are in the minority and prices have normalised.

This has led to an influx of younger families, as evidenced by the fact that many pre-primary and primary schools have long waiting lists. "We're finding that people who grew up in the area, then left to work overseas or in Johannesburg, now want to return to Camps Bay to raise their families."

Many are finding value in the wide range of 'fixer-upper' properties available. "Young families know that it makes sense to buy an older home in a good neighbourhood like Camps Bay and then, over time, renovate it to their own standards."

Venter says that so far this year, 31 transfers of freehold properties have been registered in the deeds office for Camps Bay. On average, the selling price has been 21.2% below the asking price. It is clearly illustrated in the figures this year that the market under R7 Million in Camps Bay is the most active with 21 sales (67.7%) out of 31 sales to date. The market between R7 to 10 Million having recorded 6 sales (19.3%) and R10 million and above with 4 sales (12.9%)

According to Lightstone, freehold properties in Camps Bay remain on the market for on average 393 days. There are, however, properties that have sold much quicker than the average in the area, but it all depends on sellers' willingness to price their properties in line with market realities. For example, some properties have sold within 3 -4 months, with the selling price being 11.2% below the asking price. Properties that stay on the market the longest are those that suffer the greatest draw downs from asking price to final selling prices," says Venter.

Paula Neild is the Marketing Manager for Jawitz Properties South Africa. Contact paula@jawitz.co.za or call 011-880-3550. Jawitz Properties specialise in South African property for sale and property rentals throughout South Africa. Visit http://www.jawitz.co.za for more information.