Housing market north of Durban particularly resilient
Last year saw the economy in slow recovery, with pressure looming from the Eurozone crisis, and the lending climate continuing to put a strain on bond applications.
However, despite the global markets being in such volatile territory, the residential property market held its own in the more affordable price bands, reports Carol Reynolds, Pam Golding Properties area principal in the Durban North and La Lucia areas. She says some nodes on the Northern KwaZulu-Natal coastal belt were particularly resilient, and weathered the storms with relatively stable pricing.
Says Reynolds: “It is interesting to consider some detailed statistics from Lightstone as an indication of how certain nodes performed in 2011. Well positioned close to La Lucia Mall and Gateway shopping centre, Sunningdale is a high demand suburb because prices are affordable and as it is also in close proximity to schools and the CBD. As a result this area attracts young families among other home buyers. In Sunningdale, prices on freestanding homes have averaged between R1.2 million and R1.3 million since 2007, showing the stability of this market. The average price obtained on sectional title units in the area has ranged between R1 million and R1.1 million during the past five years – again reflecting the levelling out of the price curve.”
Reynolds says in Umgeni Park, which is situated just north of the Umgeni River, prices have in fact shown slight growth: in 2008 the average price recorded on freestanding homes was R 1.2 million; in 2009 and again last year (2011), the average price peaked at R1.3 million. Similarly, sectional title units in the area have shown stability with the average price ranging from R1.081 million to R1.1 million between 2007 and 2011.
“The Durban North market peaked in 2006 with 199 total market sales recorded in this area at a total value of R375 million. Last year, there were 132 sales to a total of R300 million. It is interesting to note that while sales volumes have decreased quite substantially in the area, the average price recorded has increased from R1.8 million in 2006 to R2.2 million in 2011,” says Reynolds.
Historically been a sought-after area, La Lucia has managed to trade well despite negative economic factors. The average price peaked in 2007 at R2.95 million and then recovered to an average of R2.8 million last year (2011). The average price achieved on sectional title units in the area has remained constant since 2007 at R2.3 million.
Adds Reynolds: “While it is always difficult to predict market activity for the forthcoming year, there is a sense that we are finally emerging out of a negative cycle into a more positive one. The banks are loosening their lending criteria and appear to have a better appetite for lending. One hundred percent bonds are being offered again, albeit to a select few A-grade clients. We have noticed an upswing in buyer activity this year, with showday attendance doubling on last year’s figures. In addition, well-priced stock is selling relatively quickly and turnaround times are averaging out at their former figures of 45 – 60 days. In the price band under R3 million, stock is moving quickly, and we are seeing well-priced homes selling on their first day of marketing. In the more expensive price brackets, activity is slower and turnaround time is greater, but this is to be expected at this higher level where the buyer pool is much smaller,” she says.