According to John Loos’ February 2015 FNB Property Barometer report on the February House Price Index, a 6% year on year increase in residential property is indicated whereas the figures in January indicated a 6,3% year on year increase. There is an anomaly where many are expecting rapid price increases due to the dire shortage of stock in many areas but value rises have been slow due to other economic constraints, said Lanice Steward, managing director of Knight Frank Residential SA.
“Many have been asking whether we’re heading towards the same situation we were in in 2003/04/05, where stock shortages resulted in rapid price increases, some close to 40% in one year,” said Steward.
This, she said, is not likely to happen as all the economic conditions indicate that while the market is improving, the increased tax rate of 1% will have an impact on the market, as well as the increases in transfer duties. This is coupled to the rand being at its weakest level against the dollar since 2002 and the increase in the fuel levy.
One can expect the combination of these to affect property prices in that, while basic economic supply and demand principals might dictate that prices should rise dramatically, all the factors need to be taken into account that might keep the market in check, said Steward.
“What we have to be cognisant of is the number of units sold and the time it takes to sell a property, not necessarily just the price rises because the activity indicates whether the market is healthy or not,” she said.
PropStats, the Institute of Estate Agents, Western Cape, property data service indicates that the average selling price from 1 March 2014 to 28th February 2015 was R2 742 163, with a drop of 7,5% in the asking to selling price of homes. There were 6 500 houses sold, taking on average 89 days to sell.
The figures for the previous year show that the average selling price was R2 336 163, with a 9,8% drop from asking to selling prices and properties taking on average 98 days to sell. The total number of properties listed as on PropStats sold was 6 002.
What is interesting to note is that the cash market in the Cape is increasing, there seem to be many more buyers in the low to middle price brackets who have cash available to buy units upfront, said Steward. This is particularly on the increase in buyers from Gauteng and parents who are assisting their children, either buying apartments suited to student accommodation or small family homes to get them “set up for life”.
“The figures are telling,” said Steward. “The average selling price is up, the average difference in the asking to selling price is down, the number of days it takes to sell a property is down and the number of units sold has increased. The activity is the figure to watch, which is definitely there, and that is the healthy indicator of any market if it is steady and there are no dips or peaks in the sales graph.”