Having opened its doors in November 2005, Pam Golding Properties Nkomazi, which operates in the lowveld areas incorporating the Nkomazi and Umjindi Municipal Districts in Mpumalanga province – with offices in Komatipoort, Malalane and Barberton, is seeing a turnaround in the residential property market. The Nkomazi region is situated between Swaziland and Mozambique, linking to the two countries via key transport routes which includes the N4 to the latter, thereby forming the Maputo Corridor.
Area principal, Gerhard van Niekerk, says at the time the business was launched, the residential property market in South Africa was in an unprecedented upswing, which peaked in 2007. “The advent of the economic recession, ensuing credit crisis and sharp downturn in the residential property market that followed in 2008 is likely to resonate with consumers and investors for many years to come. Although South Africa did not experience the extreme lows as was the case in the USA and the UK, the local market was severely impacted.
“Each of our local towns, during this volatile period, did not follow the same timeline, however they followed the national trend whereby increased financial constraints on consumers resulted in a dramatic decline in housing demand coupled with a significant increase in sales in execution, followed by a price rectification,” says van Niekerk.
“The acquisition of a home is generally the largest single asset the majority of people will ever own, and, with more and more consumers aspiring to invest in their own homes, following trends in the property market is increasingly important and of interest to existing and potential home owners.
“It’s interesting to take a look at the various areas in our region, where the bulk of our buyers are people moving into the areas from other regions, which constitutes about 70 percent of our total sales, with the balance being locals. The following only covers freehold ownership with the exception of Barberton, where sectional schemes constitute a significant portion of the market. In Kamhlushwa and Kamaqhekeza, ownership is in the vast majority of instances in terms of the “Right to Occupy”, which is not traceable as it is not recorded in the deeds office,” says van Niekerk.
Sales in Komatipoort across all price ranges
In Komatipoort, a town situated 5km from the Lebombo Border post to Mozambique and adjacent to the Kruger National Park, 47 registrations were recorded during 2009, declining to 36 in 2011 and recovering to 61 in 2014. In 2009 the average price per unit was R655 000, compared with R781 583 in 2014. Sales in execution peaked at eight in 2009 and again in 2010. Gradually recovering from the downturn, the total sales value over the past five years increased at a steady rate of 4.5% per annum. Sales recorded were quite evenly spread over the price ranges from R0 – R400 000; R401 000 – R800 000 and R801 000 – R1.5 million. Notably, the majority of recent buyers, 49%, fell in the age group 50 – 64 years old and 46% of recent sellers fell in the age group 36 – 49 years old.
Pam Golding Properties (PGP) agent in Komatipoort, Alta Triegaardt, says her biggest challenge is to convince sellers to price their property correctly in order to sell at market-related prices. “She experiences a lack of realistically priced stock in all price ranges,” says van Niekerk. While sellers under financial pressure expect their home to compensate for their predicament, neither the buyer nor the financial institution financing the buyer shares this view. A neat property, priced correctly, together with a relationship of trust between seller and agent will undoubtedly lead to a successful sale,” he says.
Uptick in Marloth Park’s property market
Van Niekerk says Marloth Park, situated in the lowveld bush with an abundance of wildlife, and with a large number of holiday or leisure homes, experienced a much greater dip during the recession and recovered significantly better. In 2009, at 168 the number of registrations in Marloth Park was the lowest for the past 10 years, recovering to 311 last year (2014). Sales in execution reached a high in 2012 at 28. The average price per unit increased slightly from R224 000 in 2009 to R259 000 in 2014, with total sales value reflecting an increase of 16.4% per annum over the past five years and with the majority of sales in the R0 – R800 000 price range. The majority of recent buyers, 42%, fell in the age group 50 – 64 years old and 42% of recent sellers were in the age group from 36 – 49 years old.
Younger buyers face financing issues in Malelane
In Malelane, 5km from Malelane Gate to the Kruger Park and 45km to the Jeppes Reef border post to Swaziland, PGP reports that 38 registrations were recorded in 2009 at an average of R752 000 per unit, totalling R28 576 000. “Last year only 35 registrations were recorded, possibly due to lack of stock and/or stock in the right price range. Total sales value increased by 1% per annum over the five year period with sales in execution peaking in 2011. Here the majority of sales were in the R800 000 – R1.5 million price range. The majority of recent buyers, namely 48%, and 52% of recent sellers, fell in the age group 50 – 64 years old. It would appear that the younger generation simply cannot access finance to acquire a home or there is no stock in the price range for which they qualify,” says van Niekerk. “This is regrettable as this area attracts young buyers with families, particularly entrepreneurs and others seeking job opportunities.”
Pam Golding Properties’ local agent in Malelane, Suzette van Staden concurs, adding that available stock is not affordable for the average buyer. “Sellers may take a while to become realistic in their price expectations and during that time a number of opportunities to sell are missed as buyers simply move on. Our advice to sellers is to consider the time value of money – a lesser amount in your pocket now is worth more than a higher price in the future,” she says.
PGP is experiencing a strong demand for houses in the price range R600 000 to R900 000 as well as for vacant stands in the right area, which are usually priced at approximately R230 000 for 500sqm, with buyers then investing from R1 million to R1.5 million in building their new homes. Adds van Staden: “This area also attracts retirees seeking homes between R600 000 and R900 000, however such affordable stock is hard to find. There is also a huge demand for new residential developments, which presents an opportunity for developers to capitalise on, especially to cater for the buyer to let investor, as rental stock is also in high demand. Young singles and families as well as contractors are seeking homes to rent mainly in the R4500 to R8500 per month price range.”
Barberton buyers savvy regarding market-related prices
In Barberton, PGP reports that the number of registrations dropped from a high of 458 in 2007 to 179 in 2009, reflecting a decline of 60%. Sales in execution reached a decade high in 2012 with a significant decline in 2013. The number of registrations last year was 284, showing an increase of 9.7% per annum over the last five years. In terms of property values, the average price for sectional title units increased by 7.3% per annum from R430 000 in 2009 to R612 000 in 2014, while the average price of freehold units increased from R184 000 in 2009 to R225 000 last year, reflecting an annual increase of 4.1% per annum. Van Niekerk says 44% of recent buyers and 38% of recent sellers fall in the age group from 50 to 64 years old.
PGP Barberton agent Patience Mnisi says the market is also experiencing buyer resistance to unrealistic asking prices from sellers who may base the price of their homes on projected plans for their financial future. She explains that the prices of homes in successfully concluded sales have everything to do with current market value and what purchasers are prepared to pay in the present market. She experiences a strong demand for houses priced between R500 000 and R900 000. Houses in this bracket sometimes need some basic renovation or neatening to prepare it for the market.
“Most of our buyers come to Barberton from other regions seeking work at the mines, or on transfers. Contractors tend to move here on five-year contracts, some preferring to rent for the entire duration, unless they have children – in which case they look to buy a home. Our younger home seekers are mostly black buyers looking for an affordable stand so they can build their dream home at their own pace and to suit their pocket. We’ve recently spoken to two developers who came to us for an opinion while looking to build modern and affordable housing in the Dikbas area, priced at no more than R950 000. There is also a demand in Emjindini Extension 6 and 12 for homes selling between R400 000 and R500 000, however the local municipality does not have available land. We also see a few retirees looking to buy smaller homes under R750 000 in a gated community. Rentals are also sought after, mainly up to R5000 per month,” adds Mnisi.