Top-end still in the money

Not all es­tates tak­ing a price dive into the rough

Finweek English Edition - - Property - JOAN MULLER joanm@fin­

TALK THAT MORE golf es­tates could be head­ing for the same bank­ruptcy route as the Ernie Els-de­signed High­land Golf & Trout Es­tate in Dull­stroom may have cre­ated a per­cep­tion prop­erty val­ues at all South Africa’s golf es­tates are in free fall.

How­ever, lat­est avail­able statis­tics from prop­erty re­search and val­u­a­tion group Light­stone don’t sup­port that no­tion. In fact, Light­stone’s data shows house prices in a num­ber of SA’s top-notch golf es­tates are still on the rise. Light­stone’s data is par­tic­u­larly in­sight­ful, as it pro­vides a rank­ing of all SA sub­urbs (in­clud­ing golf es­tates) in terms of cur­rent mean es­ti­mated val­ues.

A search on golf es­tates re­veals Steen­berg is cur­rently SA’s most ex­pen­sive golf­ing en­clave to live in. The swanky es­tate in Cape Town’s re­fined Con­stan­tia belt cur­rently has a mean val­u­a­tion of a hefty R10,320m (see ta­ble).

In­ter­est­ingly, nine of SA’s top 15 golf es­tates recorded a higher av­er­age sales price for first quar­ter 2009 than for 2008 as a whole.

It has to be said a high vol­ume of land (as op­posed to com­pleted home) trans­ac­tions could cause sig­nif­i­cant price swings in golf es­tates. In other words, if you as­sume that mostly un­de­vel­oped stands are sold in year one at a par­tic­u­lar es­tate at around R600 000 and in year two most sales at the same es­tate con­sti­tute com­pleted homes at around R2m, or vice versa, the jump in av­er­age prices will be sub­stan­tial. Thus av­er­age sales prices can be skewed from one year to the next, de­pend­ing on the type, size and num­ber of prop­er­ties sold.

What’s bla­tantly ob­vi­ous is that the num­ber of sales has fallen off dra­mat­i­cally in all SA golf es­tates since 2007. Sales vol­umes at 11 out of the top 15 es­tates are down more than 60% (12 months be­tween May 2008 and April 2009 com­pared with the 12 months from Jan­uary to De­cem­ber 2007).

In golf es­tates where more than 50 sales/ year are still be­ing con­cluded, the small­est drop in the num­ber of sales was recorded at Zim­bali, where they were down from 96 in 2007 to 70 sales in the year to April 2009. The big­gest drop was recorded at Mount Edge­combe, at Umh­langa in KwaZu­luNatal, where sales vol­umes dropped from 383 to 151 over the same pe­riod.

How­ever, the sharp fall in sales vol­umes isn’t pe­cu­liar to golf es­tates, with most es­tate agents re­port­ing a drop in res­i­den­tial prop­erty sales across the board of be­tween 50% and 70% over the past 12 months.

It’s im­por­tant to note the dis­crep­ancy be­tween Light­stone’s mean and av­er­age prices for each golf es­tate is due to dif­fer­ent method­olo­gies used to track move­ments in prop­erty val­ues.

Light­stone di­rec­tor An­drew Watt says mean val­u­a­tions are based on a cur­rent es­ti­mated av­er­age value, tak­ing an es­ti­mated mar­ket value of each prop­erty in a spe­cific es­tate into con­sid­er­a­tion.

Av­er­age sales prices, on the other hand, are based only on the ac­tual sales trans­ac­tions recorded at the Deeds Of­fice over a spe­cific pe­riod. Mean val­u­a­tions are there­fore un­af­fected by the mix of prop­er­ties sold over a spe­cific time while av­er­age sales prices are.

How­ever, av­er­age sales data re­mains a use­ful in­di­ca­tor of price move­ments and is widely used by the res­i­den­tial prop­erty in­dus­try to gauge house price trends.

Cape Town’s Steen­berg is dear­est golf es­tate.

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