Outrage after metro labelled ‘dysfunctional‘

Economist claims house prices falling due to inability to deal with water crisis

AN economist has raised the ire of metro authorities after he attributed rapidly dropping house prices in Nelson Mandela Bay to the “arguably dysfunctional” municipality’s ability to deal with the region’s water crisis. His comments emerged in property market commentary accompanying the launch of Standard Bank’s inaugural Provincial Housing Price Index (PHPI) and Regional House Price Index (RHPI) last week.

Standard Bank, which lays claim to being the biggest home loan provider in the country, launched the two house price indices to provide key insights into regional and provincial market trends across the country.

The new indices will supplement the monthly National House Price Index (NHPI) and provide data around the trends underpinning residential property movements.

“The new index will show a diverse performance of property prices,” Siphamandla Mkhwanazi, the Standard Bank consumer economist whose assessment ruffled the metro’s feathers, said.

“For instance, our research for May shows that a price recovery in Gauteng in the first few months of the year was largely driven by a robust performance in Tshwane, with first-time buyer demand particularly strong.”

Pointing to key trends, Mkhwanazi said the RHPI showed a diverse performance of property prices and, among others, noted that Johannesburg had shown signs of recovery and Cape Town had “continued to outperform, although the steam is coming off”.

His assessment of Nelson Mandela Bay read: “Prices are dropping off rapidly, although not declining [in nominal terms] as yet. The metro is dealing with a water crisis and arguably a dysfunctional municipality.”

Asked later to ascertain what he meant by dysfunctional, Mkhwanazi said he was referring to the Bay water crisis in comparison with Cape Town’s dire water crisis.

“There are two points here. The Nelson Mandela Bay metro is dysfunctional due to its inability to manage the water crisis and, secondly, it does not have the resources to deal with the crisis,” he said.

“Both of these points are made as a comparison with Cape Town’s ability to handle their water crisis and the resources they have to deal with it.”

Responding to the assessment, Nelson Mandela Bay mayor Athol Trollip’s chief of staff, Kristoff Adelbert, said: “This outlier opinion is a far cry from reality. The Nelson Mandela Bay property market is booming and was recently recorded as the third-bestperforming metro area in South Africa.

“The fact is that where good governance prevails, investment skyrockets. We are seeing that on the ground here in the city.”

Estate agent Nikki Strooh, the principal at Harcourts Beachfront in Port Elizabeth, said property selling prices reflected a boom in the local market during 2005.

“Conditions are a reflection of the boom,” Strooh said.

“Sellers who bought during that period are now hoping to recover the prices for their homes and there has been a drop-off in price, but not such a drastic drop-off. “Our area, for example, is doing well.” She said while there were some concerns around the metro authority, she would not describe it as dysfunctional.

“We should be positive, there are lots of positive things that we should focus on.”

Charlotte Vermaak, a principal at Chas Everitt, said buyers who acquired properties in the boom period were now struggling to recover their purchase prices.

“It is about people who want to sell now, but are finding themselves selling at a loss.”

She said a drop in prices had been noted only in the high end of the market.

Vermaak said the water crisis had affected property sales.

“When you can’t do things such as water your garden or fill your pool then it naturally does have an impact.”