Upper-end EC home market slows down

EAST London’s houses are spending a longer time on the market, as reduced affordability and political uncertainty is slowing down the property boom.

One upper-end Gonubie house has been on the market for nine months, having dropped from its original selling price of R2.3 million to R1.5m.

Estate agents say the property market has turned into a buyers’ market, with spoilt-for-choice purchasers now having the upper hand in determining prices.

But Gonubie homeowner Darrel Eberharpt, whose house has been on the market for almost a year, said he cannot drop his price to below R1.5m. Eberharpt said he had rejected at least seven offers that fell below this threshold. His double-storey house, in Gonubie’s 18th Avenue, has two bathrooms, four bedrooms and a garage.

“I wanted a price of at least R1.9m; but I’m not prepared to take less than R1.5m. Otherwise, I’ll hold on to it until the price goes up. I am not in a hurry to sell. If I can’t get my price, I’ll keep the house,” said Eberharpt.

Rencon Real Estate principal Sandy Schwedhelm said it was common for houses to spend a longer time on the market, with the market conditions favouring home buyers.

“There are a lot of houses originally priced above the R1m mark that have been sold at R200000 to R300000 less than the asking price.

“The bond rate and the National Credit Act both make it more difficult to get finance. There’s also political uncertainty, which makes people reluctant to invest in South Africa,” said Schwedhelm.

Lew Geffen, Sothebys International Realtors chairperson, also attributed the slow pace of sales to more stock – a result of people emigrating or downgrading.

Sothebys has now changed its approach and advises its clients to adjust their prices.

Otherwise, the agency will decline to market overpriced property.

According to Geffen, the situation is magnified by negative sentiment in the market and by political leadership in the ruling party.

“A lot of people are emigrating as a result. The Eskom crisis has also led to people losing faith in the country and its leadership,” said Geffen.

Home sales are, however, still rocketing in the lower end of the market, with Kwa Boy Boy Estates and Building Contractors owner Boy Boy Giba saying smaller units in Mdantsane are quick to sell.

However, Giba concurred that the market conditions are not ideal for house price growth.

“A lot of people have accumulated debt for non-investment purchases over the past while.

“When they want to buy fixed property, which increases debt, the bank would be reluctant to give them credit,” said Giba.

According to Giba, prices are still stable, and it is the properties priced above R300000 (in Mdantsane) that stay on the market for longer.

Last month, Standard Bank’s Residential Property Gauge revealed that the bank’s median house price index recorded a 0% annual growth rate for the third consecutive month in February.

“Houses are staying on the market for longer already. This is partly due to a substantial moderation in demand for residential property. Volumes have dropped by between 20% and 30%, which is a result of a reduced affordability,” said Standard Bank economist Sizwe Nxedlana.

First National Bank (FNB) economist John Loos said the bank’s Property Barometer in February pointed to an ongoing relative weakness along the country’s coastline, especially in KwaZulu-Natal and the Western Cape.

The coastal “former white suburban” market appeared to be more cyclical as a relatively high portion of sales were for investment and holiday purposes, and were therefore exposed to interest rate rises, Loos said. “The one anomaly is the Eastern Cape, which saw a slight up tick in house price inflation, while late last year FNB’s Property Barometer for that region showed a similar up tick.

“Given that further rate hikes late last year still need to feed into the numbers, it would be premature to believe that this is the start of any lengthy upward trend just yet.”

Article by: SIYA MITI and ROUX VAN ZYL - www.dispatch.co.za