Top-end still in the money
Not all estates taking a price dive into the rough
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.