Silver lining for residential property investment
There’s no denying that the residential property market in SA has taken a few hits over the past decade and continues to be affected by the state of the economy. But there is some good news. The SA Wealth Report by New World Wealth counters comments on the generally poor performance of the sector, influenced by the depreciating value of the rand from R9.30/$ in 2008 to R14.40/$ in
2018, by highlighting an uptick in prices in some residential segments by as much as 30%. These include luxury estates such as Zimbali Coastal Resort near Durban, Fancourt on the Garden Route and Val de Vie Estate in Paarl.
“Some of the top performing luxury apartment complexes over the past 10 years include The Pearls of Umhlanga and De Meermin in Plettenberg Bay,” writes Andrew Amoils of New World Weath. “Notably, square metre prices at The Pearls of Umhlanga are now reaching similar levels to top apartments in Bantry
Bay and Clifton in Cape Town. There has also been an increase in prices in surrounding areas such as Ballito and La Lucia.”
In fact, the eThekwini Sub-Regional House Price Indices show this city is outperforming all major metros in SA, according to the FNB Property Barometer released in July. Average house price growth was 5% in Q1 2019, with areas in the north, closer to the airport, performing particularly well.
FNB’s Economics
Weekly reflects an upturn in house price growth in July, recording 3.6% year on year from 3.5% year on year in June. “Looking ahead, housing market trends will remain heavily dependent on developments in the broader economy,” according to FNB analysts. “Encouragingly, FNB housing market strength indices, based on the market perceptions of FNB property valuers, revealed a mild improvement in demand while the pace at which properties are entering the market for sale continued to slow.” At the higher end, market conditions continued to favour buyers. The need for affordable homes in high-demand areas, such as the Cape Town City Bowl and Woodstock, means apartments are getting smaller. “Even with the little bit of softness in the market, it’s still about what people can afford,” says David Cohen, MD of Signatura. “We’re seeing a hybridisation of apartment living: smaller individual spaces but more shared amenities such as a deck with a pool and a gym that’s like an extension of your living room. That’s what keeps costs down.”
The desire for more manageable maintenance costs is also driving buyers into sectional title schemes. “People are choosing to downscale in terms of property size,” says Byron Caloyannis, Pam Golding Properties area principal for Johannesburg South and Alberton. “That does not necessarily mean cheaper property schemes. There are a number of high-end sectional projects