Drop lower than elsewhere
EAST London’s property market is battling the national trend of steadily falling house prices.
Some experts say the metro is bolstered by the proximity of Bhisho and its thousands of commuting civil servants and that only more expensive homes in the middle segment are slow sellers.
Penny Lindstrom, chairwoman of the Border region of the Institute of Estate Agents, said: “We don’t get affected as much. We have a lot of people who move here because they don’t want to live in a city that is going flat out. We have a lovely slow pace. We are still selling homes. That hasn’t slowed down, but we can see prices have come down by 10% to 15%.”
Conveyancing attorney Mike Francis said East London property prices were on average 20% stronger than in Port Elizabeth.
Francis said the lower segment of the East London market – houses costing up to R800 000 – was “steaming ahead. That is where all the action is,” he said.
Absa home loans division’s national property analyst Jacques du Toit on Monday published the Absa house price index, which showed that since May last year, house prices had fallen 0.6%.
Du Toit said the slowdown, which started last May, affected all categories of housing.
“In real terms, house prices were on average down by more than 11% in April compared to the peak in August 2007.”
He forecast that home prices would only grow 6% this year, down 3.4% from 9.4% last year. Prices grew 10% in 2013.
Du Toit said consumer price inflation was rising and a hike in domestic interest rates was forecast to hit before the end of the year.
“Real house price growth is forecast to be under severe downward pressure in the coming 12 months,” said Du Toit. CONVEYANCING attorney Mike Francis has calculated that, at a bank interest rate of 9.25%, 100% bond holders face these monthly bond repayments:
A small home (R832 000) R7 260 (over 240 months) or R6 845 (over 360 months);
A medium-sized (R1.2-million) R10 899 (240 months) or R9 790 (360 months) and;
A large home (R1.9-million) R17 071 (over 240 months) or R15 335 (360 months).
Lindstrom said: “Big houses are taking longer to sell, but if it’s worth the money, people will buy.”
She said stock in the lower segment was still in short supply.
Michele Gravett and Cheryl Petzer, principals of Jawitz East London, said the local market lacked stock, creating a demand which helped buck the national trend.
Jawitz agent Michael Jones said the downward pressure on prices was linked to reduced disposable income, slower economic growth, rising fuel and electricity prices and tighter bank credit.
“The house price growth now being experienced is in most cases equal to or less than the inflation rate and consequently no real house price growth and in some instances negative real growth is being experienced,” said Jones. — mikel@dispatch.