SA's most resilient market finally yielded to the pressure as the flailing economy slowly started to affect the top end of the market
Prior to 2017, the Atlantic Seaboard’s housing market had stoically withstood the brunt of the growing economic and political instability, consistently achieving double-digit growth way above the national average.
Last year, however, the country’s most resilient market finally yielded to the pressure as the flailing economy slowly started to affect the top end of the market in 2016.
Despite this, steady demand and stock shortages continued to fuel the entry and mid-level markets, say Lara Kaplan and Fran Segal, Fresnaye and Bantry Bay area specialists for Lew Geffen Sotheby’s International Realty.
“This strong momentum continued into the following year, and 2017 started on a positive note. However, within a few months a discernible downward shift became apparent and we started to see a drop in sales volumes and house price growth,” Kaplan says.
The decline in the residential price growth rate on this prestigious strip is clearly reflected in the November FNB property barometer, which reports a significant drop from a promising quarterly year-on-year high of 26.5% during the first quarter of 2017 to 23.88% by mid-year and 19.9% by the end of the third quarter, Segal says.
The freehold sector experienced a sharper knock than the sectional title market, notes the group’s chairman, Lew Geffen. He attributes this to a number of key factors.
“While the security and convenience of apartment living have become increasingly appealing draw-cards in recent years, a key factor now influencing both the housing and sectional title markets is the growing challenge of declining home affordability as consumers are forced to tighten already restrictive belts.”
Although the upper end of the market continued to be hardest hit by the prevailing climate, Kaplan and Segal say by the third quarter of 2017, a general nervous sentiment among the wealthy fuelled an increase in the number of luxury homes put on the market to liquidate assets or move money off-shore. However, they expect to see a drop in reactive selling in this market after the positive outcome of the December ANC conference.
They say during last year they also noticed an increase in renovations as a growing number of owners opted to stay put rather than sell for a diminished return on investment.
Geffen says: “Although the Atlantic Seaboard undeniably took a significant knock last year, it remains a stable market offering solid returns. Cautious optimism is further inspired by the fact that there is still keen developer interest in the area, with undiminished demand for GR4-zoned plots and properties on which multiple units can be built.”