Kwazulu-Natal Business News

Send  Share  RSS  Twitter  09 Sep 2011

PROPERTY: Some Positive Indicators in Durban House Market


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While the Durban house market got off to a slow start in the first half of 2011, currently and on a positive note, the turnaround time for the successful sale of well-priced stock has reduced and in the more affordable price category (ie properties under R2 million) market activity is good, says Carol Reynolds, Pam Golding Properties area principal in Durban North and La Lucia.

“Overall, there remains an undercurrent of overpricing which is impacting upon turnaround time, activity levels and the offer rejection rate, however, with increased market awareness, price adjustments are taking place with the result that we are seeing more movement in most sectors of the market. Average turnaround times to sell are from two to three months, and even less in some instances,” she says.

“At grassroots level, we have seen an increase of 15 percent in Durban house showday foot traffic in the second quarter of this year (2011) when compared with the first quarter. We have also seen growth in enquiries via the internet, highlighting the fact that websites are fast becoming a key research tool for buyers, enabling them to hone their options and choices before making personal contact with an estate agent."

Durban House Market Begins to Gain Momentum

Reynolds says from an actual sales perspective, and in the areas of Durban North and La Lucia, activity levels have grown in quarter two of this year. “While activity in these areas was down almost 30 percent for quarter one compared with the same period the previous year (2010) - based on figures from Lightstone - we are now seeing activity levels catch up to those recorded last year, and are hoping that this trend will continue for the remainder of the year.”

She says the offer rejection rate is unfortunately still relatively high, with sellers losing out because they are underestimating the value of a written offer in a market which remains constrained by subdued conditions. “The quality of the purchaser as well as the nature of the terms of the agreement are as important as the price, and where sellers are clinging to price before quality, sales are crashing because the banks are not finding value.”

Reynolds reports that in Durban North the price bracket below R2 million is the most active, with more offers being converted to sale. In La Lucia, the sectional title market is currently more buoyant than the freestanding homes market because units selling for under R3 million are presently in higher demand than larger homes in higher price categories.

Understanding the Durban House Market Price

“What we are seeing in the marketplace in general is that the price differential between offers made and prices at which homes are marketed can sometimes be as much as 20 percent. This is due to the fact that in such instances marketing prices are not necessarily a true reflection of actual value. We are finding that sellers are receiving valuations that are inflated, and then experiencing the frustration of not selling their properties because their marketing prices are out of sync with actual market conditions. It is a fact that by its very nature the selling of a home is a very personal matter, and understandably many people attach considerable sentimental value to their homes. As a result, some agents find it difficult to give their sellers frank advice about realistic pricing, because they don’t want to disappoint their sellers. However, correct pricing is in the seller’s best interests to avoid a Durban house or property which may even end up becoming stale or sitting on the market for a lengthy period
– or even not selling at all - due to being over-priced, or significantly discounted.”

Reynolds says affordability remains the key driver of bond acceptance, and it is imperative to factor household running costs into the equation when looking at buyer affordability. “On the whole, purchasers who have the means to put down a sizeable deposit will be better positioned to negotiate with the banks. Generally one aims for a 15-20 percent deposit, however the banks are once again beginning to look more favourably on 10 percent deposits again, so anywhere between 10 and 20 percent is a good starting point on your Durban house.


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