A four bedroom family home in Durbanville is selling for R1.995 million.
On residential property, they say in line with an improving demand-supply balance, we approach 2014 with accelerating house price growth when viewed on a monthly basis. “So, whereas the average price growth for 2013 was slower than that of 2012, that was due to growth earlier in 2013 being slower, whereas in the latter parts it was once again picking up speed, reaching 8.7 percent year-on-year (y/y) in December.” As a result, they explain that despite a slowed economy in 2013, other factors, most notably some possibly more relaxed lending by banks and supply constraints - their 2014 average house price growth forecast is 9 percent up from 6.8 percent growth in 2013. “In 2015, we would expect price growth to once again slow, based on our forecast that interest rates could start to rise in 2015.” Despite a weak economy that looks likely to persist, supply constraints could cause 2014 house price performance to be slightly better in our view, according to Loos and Swanepoel. For buyers entering the market, this could be good news as banks have eased up slightly and are starting to grant loans. Org Geldenhuys, managing director of property development and marketing company, Abacus Divisions, says in 2013, financial institutions marginally relaxed their lending criteria an ease which is expected to continue during 2014 and depending on how the new credit amnesty bill impacts the market, 2014 should see a greater level of loan easing. In 2013 the percentage of loan application approvals increased to over 51 percent up from the 26 percent seen in 2009 during the height of the global economic recession.
As a result, they explain that despite a slowed economy in 2013, other factors, most notably some possibly more relaxed lending by banks and supply constraints - their 2014 average house price growth forecast is 9 percent up from 6.8 percent growth in 2013. “What we are also seeing on the ground is that we have more cash buyers – people and companies who have been sitting on their money during the economic recession.” He says these individuals are now feeling more buoyant and are keen to invest some of this cash. This bullish sentiment is going to assist with the recovery in the commercial property market and the residential property market as a whole, he points out. Buying property Meanwhile, Jan Davel, managing director of Real Net estate agency reckons now is a good time for homeowners wanting to buy luxury property. He explains that prices in the middle segment of the market are rising faster than those in the luxury sector. According to the latest Absa housing review, middle segment prices showed an average y/y increase of 9.3 percent in Q3 2014, with the large home sub-segment achieving an average y/y increase of 8.4 percent and much more in every region except the Free State and Limpopo. Davel notes that prices in the luxury home sector, priced from R3.8 million achieved an average y/y increase of only 7.3 percent and the differential means that there are good opportunities for the astute homeowner to “trade up”. “The huge differential between the cost of newly-built homes and that of similar pre-owned homes is also in favour of those who aspire to own a luxury property in any one of SA’s gracious heritage suburbs.” Furthermore, he points out that the Absa report shows that it is currently as much as 37 percent more expensive to buy a newly-built home than it is to buy a similar, pre-owned home and this creates a margin for renovation and modernisation of older luxury homes without overcapitalising. In the case of a 500 square metre pre-owned home in an upmarket suburb that costs R3.8 million, for example, one can subtract about R1.2 million for the land value, so the actual cost of the home would be R5 200 per square metre, he says.
A three bedroom house in Pretoria North in Gauteng is selling for R1.224 million are currently quoting for newly-built luxury homes in sought-after suburbs and estates, and gives the buyer room to spend at least another R1 000 per square metre on upgrading the property and perhaps improving the security without exceeding a market-related limit for the area. According to Louis Schoeman, the Rawson Property Group’s franchisee for this area, Durbanville became a sought-after location to buy and rent into in 2013. Schoeman says Durbanville homes are now irrevocably in the middle, upper middle or top bracket price range and there are no low cost homes in the 16 districts that make up the territory. The lowest priced apartment will cost over R700 000 and even the bottom rung housing in the area will now probably cost at least R1.3 million. “No other middle or upper bracket area in Greater CapeTown can give anything like the value on offer in Durbanville.” Schoeman says popular properties are priced between R1.5 million to R2.5 million and value is to be had in top end homes, and anyone with around R3 million or more available for a home is absolutely assured of getting a genuine bargain. Buyers are increasingly younger people, ambitious and upwardly mobile, who appreciate what Durbanville has to offer such as good schools and sports facilities, a semi-rural village atmosphere with attractive vineyard scenery. Durbanville buyers tend to have good credit records, high incomes and have very little difficulty in raising bond finance. “Bonds have never been a problem for this franchise and our hit rate on applications is as high as 90 percent,” he says. Demand is pushing prices up at over 10 percent per annum and this is expected to continue in 2014 and beyond. He notes that a recent Deeds Office report shows the average price of a home in Durbanville in 2012 was R1.2 million. In 2013, it reached R1.5 million – a far larger increase than the 10 percent he quoted – it is in fact in the region of 50 percent. Rented property prices are, however, rising even faster than sales and well priced properties are snapped up on listing. Apartments in Durbanville are currently priced at monthly rents of R4 000 to R6 500 and homes from R8 500 to anything up to R20 000, he adds. – Denise Mhlanga