Is Ballito Bucking the Negativity Trend
Category Property Talk
Recently there has been a fair deal of negativity across various real estate magazines and online portals regarding pricing trends and the property market as a whole in South Africa. The Western Cape, including the Atlantic Seaboard, has traditionally been hailed as the pinnacle of our local market yet there has been a softening of residential house prices during the past two years. Furthermore, in many parts of the country the reality for some sellers who have bought their property in the last five years is that they may not even get their purchase price back in the current market.
This is not just pure sentiment either as according to the SA Wealth Report, South Africa's residential property market has performed poorly over the past 10 years (2008 to 2018) with average prices declining by around 5% in US$ terms. It should be noted that the Rand depreciated significantly during this period from R9.30/US$ at the end of 2008 to R14.40/US$ at the end of 2018, which clearly has been a major contributing factor to the decline, especially in our luxury markets.
Notwithstanding these facts, there is actually a much brighter trend that has been unfolding on the North Coast of KwaZulu-Natal. According to the same SA Wealth Report there are some notable residential segments in SA that have actually risen significantly in price over this period, some by up to 30% in US$ terms . These areas include Umhlanga which has been the top-performing residential market in SA over the past 10 years and there has also been an uptick in prices in surrounding areas including Ballito.
Whilst there have been no fireworks, any growth against a comparably stagnant National market should be well received by North Coast property investors. Doing a comparative year on year analysis of the sales figures achieved by Seeff North Coast, the number of properties sold in the area remained at approximately the same level indicating that property sales from Ballito to Tinley Manor have remained stable in spite of all the political wrangling's and economic uncertainty. That said, there have been some encouraging performers. The average sales price achieved for a freestanding property in Simbithi Eco Estate for example was 20% higher during this time frame, and Sectional Title prices in Simbithi also increased by approximately 24%. In Ballito the average sales prices achieved in our sectional title developments increased by 5% and in Palm Lakes Estate higher prices have also been achieved on average over the past 12 months.
Adding to our positive local sentiment, the recent 25 basis points rate cut in July has brought the prime lending rate down to 10%, and the repo rate to 6.5%. This announcement is an encouraging one for the housing market and consumers as a whole. The rate cut, coupled with early indicators of recovery in the South African residential property market does augur well for the balance of the year.
Author: Chrissie Johnson