Statistics compiled by South African property analysts recently have shown that the demand for middle and lower priced homes, i.e. those selling at around R1,2 million (or lower), has been so strong that this has become the most actively traded of all the price brackets in the residential property sector.
Nevertheless, says Justin Smith, co-franchisee of the relatively new Rawson Property Group franchises in Greenside and The Parks in Johannesburg, demand for the more expensive homes has also grown exponentially – in fact at a rate not seen for at least a decade. The result of this, he says, is that demand in these price brackets far exceeds supply and prices throughout the areas he serves are rising by at least 7% per annum.
Included in “The Parks” and related suburb areas served by this franchise are Parkview, Parktown North, Parkwood, Parkhurst, Riviera, Killarney, Houghton, Saxonwold, Westcliff, Forest Town and Greenside – and in all of these areas sales have risen noticeably for the whole of the last year, said Smith.
“In the last 12 months,” he said, “Parkhurst had over 140 sales, while in Parkview there were 40, in Greenside 66 and in Parktown North 82. The average sales price in ‘The Parks’ area is now a staggering R3,8 million, which by my estimate is more than 6% up year-on-year — but it is still possible in the areas we serve to offer a very wide variety of price choices – anything from R1 million to R30 million.”
Giving evidence of the demand, Smith added that on any show house day his team will be visited by up to 30 viewing couples. What is more, many buyers are, he said, able to put down large (20% to 50%) deposits and this franchise has seen buyers paying in cash for properties priced over R3 million or R4 million. What is more, bond applications from this franchise have had a very high hit rate, with nearly 90% of applications being granted.
This situation, commented Smith, has come about not only because buyers in the area are affluent, but also because today’s buyers are not wanting to raise their debt any further – the dangers of excessive debt are more widely appreciated now than before. Buyers today, said Smith, have in most cases already investigated what loan amount they will qualify for and what will work within those parameters.
Asked what is driving the demand, Smith said that ‘The Parks’ precinct is well established and carries great prestige. This, he said, is enhanced by the exceptionally large number of old schools, both private and state, with good academic and sports records, including: St Johns College, King Edward VII School, Parktown Girls’ and Boys’ High, Auckland Preparatory Park, The Ridge School, Roedean School and Kingsmead College as well as Parkview Junior. The area is also home to, or close to, many of Gauteng’s famous sports clubs, including The Country Club and The Wanderers Club.
“Speaking generally,” said Smith, “our amenities and sporting and outdoor opportunities are therefore as good as you can get in Johannesburg today.”
The big concern for the coming year, said Smith, is that interest rates could rise by as much as 3%. This would dampen the current market and reduce demand, however, he is still very bullish on all the areas his franchise serves and expects demand for houses in them to continue.
“Buyers contemplating moving into this area have to appreciate that there are many ‘micro influences’ which make these areas popular. The chief of these are the aesthetic appeal of old established areas with tree lined avenues and the abundance of parks, recreational areas and good amenities. Also likely to influence the price structure in the time ahead is the fact that very little land is available for future development which could impose traffic flow and other stresses on the area’s infrastructure. This is seen by many buyers as a further bonus point.”
“At present,” said Smith, “the market in these sought after Johannesburg Northern Suburbs could hardly be more bullish and those looking for capital appreciation when they buy can rest assured that it will run at the very least on a par with the inflation rate and probably a great deal higher.”