The year 2014 began with gusto as the property market finally seems to be emerging out of the recession, says Carol Reynolds, Pam Golding Properties’ area principal in the Durban, Durban North and La Lucia areas. She says this year to date has seen a resurgence of buyer activity, most notably in the lower price bands, and in many cases where stock is correctly priced, properties are selling within the first few weeks of being listed.
“In general, sentiment has improved and in most of the metro areas we are seeing stock shortages. On a more micro-level, it is always useful to look at some of KwaZulu-Natal’s most popular suburbs to analyse the status of the property market,” she says.
“Seventy-five percent of properties in Musgrave, Durban are under sectional title schemes. This makes the area very buoyant in terms of constant supply and demand. Age groups of both buyers and sellers in the area are evenly spread, but in recent years we are witnessing a growing emergence of young buyers under the age of 35 years moving into this market.”
Reynolds says the attraction of Musgrave lies in its central location as well as its price band offering: the average selling price for freestanding homes in the area is R1.5 million, and the average sectional title unit sells for R898 000. These prices are very similar to 2006 levels, and show a rapid recovery from the downturn in 2010, where freestanding homes dipped to an average price of R1.2 million.
“It is interesting to note, however, that while the market in Musgrave has recovered, the number of sales recorded in 2013 is still shy of the boom years, with 277 units being sold in 2013 compared with a high of 412 units sold in 2007.”
Morningside is another desirable node in Durban, and this area comprises 30 percent freehold and 70 percent sectional title units. “This mix attracts a wide spectrum of buyers from a variety of price bands and age groups,” says Reynolds. “The LSM (living standards measure) in the area is 9, so it is an affluent area. The biggest age category entering the Morningside market is the younger age group of buyers under 35 years and the family market of buyers between the ages of 36 and 49 years. The area is popular with young families because of its excellent schools.”
In 2013, the average price achieved for freehold properties was R1.969 million and the average selling price for sectional title units was R740 000. “In fact, this sectional title price has been very consistent since 2011. The market in Morningside has recovered well since the recession, where prices dipped to R1.4 million on freehold properties. However, while there has been price inflation on freestanding homes, the number of sales recorded in recent years is still short of the boom years, with 439 units selling in 2006, compared with 198 units being sold last year (2013),” adds Reynolds.
She says Durban North is another popular area, particularly with young families. Durban North comprises 95 percent freehold properties and only five percent sectional title, demonstrating the nature of the area; being an established node filled with large family homes. “It is not surprising that the most active age group in the area is between 36 and 49 years – namely young families who are gravitating towards the excellent schools and family lifestyle offering.
“In 2013, the average price for freestanding homes was R2.4 million, a figure which has increased by 30 percent since the 2008 dip down to R1.9 million. Positively, the number of sales recorded in the area has been relatively consistent over the years, indicating the stability of the market and the fact that there is constant supply and demand, as families move through their schooling life cycles. In 2008, 118 homes were sold in the area; 2009 saw 117 sales; 2010 experienced 132 sales; in 2011 there were 137 sales; 118 sales in 2012 and 125 sales recorded last year. “
Reynolds says a fourth area that is constantly in demand is La Lucia, an area comprising 11 percent estate living; 45 percent sectional title ownership and 41 percent freehold.” This mix of properties caters for a diverse market, but because the average price in the area is high, there are very few first time buyers who are able to enter this area. The most active buyer category is the second, third and fourth time buyer who is typically between 35 and 49 years.
“The average price of freehold properties in the La Lucia area is R2.8 million and the average sectional title price is R2.4 million. This market has shown incredible stability throughout the recessionary years, with almost no price deflation. Indeed, prices have ranged between R2.2 million and R2.4 million on sectional title units since 2008. Freehold prices have also remained consistent between the R2.5 million and R2.8 million mark. La Lucia is therefore a very safe market from an investment perspective and holds its value despite unfavourable climatic conditions.
“In summary, we look forward to a more buoyant 2014, and are optimistic that the interest rate increase won’t buffer the burgeoning upsurge of buyer activity in the marketplace in these areas,” concludes Reynolds.
For further information contact Pam Golding Properties Durban, Durban North, La Lucia on 031 3086700 / 031 573 6000 or email firstname.lastname@example.org.