Quarter need to sell due to crunch

A quarter of Durban's residential property sellers are offloading houses to scale down because of financial pressure and the year ahead doesn't look rosy.

This is the upshot of the latest FNB property barometer, which says Durban's market is not yet out of the woods because of an oversupply of property.

The barometer, compiled by the bank's property economist, John Loos, said single-digit average house price inflation would be "as good as it gets for eThekwini".

Keith Wakefield, CEO of Wakefields Estate Agents, said the market was picking up, but access to bond finances remained an issue.

The beachfront, CBD and Pinetown had a lot of potential buyers. But affordability and qualification remained important factors.

Wakefield said on the Berea 16 percent of sales in the past quarter had been to investors and most sellers were 50 or older who were retiring or sizing down.

Grant Gavin, broker-owner of ReMax Panache, said a recovery in the manufacturing sector, after two years in the doldrums, pointed to an increase in demand for Durban property. But some markets still remained hard hit.

"For example if you had to compare a coastal holiday market like Umdloti to a primary residential market like Durban North, you would find that while demand was fairly resilient in Durban North with buoyant sales levels, demand for holiday apartments in Umdloti had slowed considerably."

"You would therefore expect a market like Umdloti to show a stronger recovery as the effects of the recession wear off."

Acutts chairman Pat Acutt said there were signs the market was recovering. "But, regrettably, the trying obstacle in a seller's way remains the final granting of loans by the banks. Conservative pricing remain the watchwords."

Seeff KZN chairman Tony Hickman said he agreed with FNB that single-digit house price growth was the best sellers could expect.

"The decline in emigration selling from 29 percent in the third quarter of 2008 to 7 percent in the fourth quarter is good news, as is the shorter period taken for properties to sell."

Carol Reynolds, Pam Golding Properties area principal for Durban North and La Lucia, said, "The market is definitely showing signs of recovery in Durban North. However, in keeping with national trends, a significant number of sales is still driven by the need to scale down for financial reasons."

Jill Drummond, PGP area manager for Durban, said, "Bank lending criteria are still a major contributor to limiting conclusive sales. Our sales turnaround time has reduced, although properties must be well priced."

Owen Dormehl, CEO of Dormehl Property Group, said there was a positive turn in the market, with areas such as Westville bucking the trend.

Westville houses priced between R950 000 and R1.7 million attracted most demand.

ProProp CEO Mike Bennett said sellers were being more realistic about pricing. The main issue stalling market recovery was strict bank lending criteria, which probably accounted for FNB's findings that former township areas had the worst price inflation, "because that is the last area banks are prepared to lend money to".

Though there were signs of recovery, it was still a buyers' market.

Mike Stanley of Stanley's Properties said, "Buyers are more cautious about offers. Only the sensibly priced homes are selling."

Property Guide (Sunday Tribune)

Posted at 07:06AM Mar 15, 2010 by Editor in Residential  |