The Residential property market in Durban is not entirely a tale of woe at the moment, in spite of repeated interest rate increases since June 2006. Data collected from Prop Values showed that the number of houses sold had dropped since then, and the time houses had taken to sell had increased.

But Prop Values director Ross Sibbald said Durban’s average selling prices, in spite of some depressing estate agency reports, had increased. Prop Values compared the five month period of January to May 2006, before the start of the current rate increase cycle, to January to May of this year.

Sibbald said the average selling price for both conventional and sectional title units had increased between the two periods across greater Durban. Umhlanga was forcing the pace with a 35% increase in the average selling price for conventional homes and Durban North led the charge with a 36% increase in the average selling price in sectional title dwellings.

The Upper Highway recorded a 30% increase in the average price across all property types sold between the period under review, followed by a 27% increase in the Berea, a 25% increase in Westville, 14% increases in both the Bluff and Pinetown and a 12% increase in Queensburgh.

Rises

Both Mike Bennett, managing director of ProProp franchise chain and Berea-based Malcolm Plint of Malcolm Plint Estate Agents, confirmed that Prices had held up in their areas in spite of the slowdown in sales volumes. Plint classified the current market as “re-finding its feet after a wonderful couple of years of exponential price rises”.

Unlike earlier market down-turns, he said, the effects of the current decline were being psychologically over-emphasised  because they were unexpected.
Bennett said the half percentage point interest rate increase announced last week was ironically positive for a market in trepidation of an increase that many speculated could hit a full two percentage points.

The Bluff’s Craig Bell of Acutts local franchise said last week’s announced had a calming effect, but he said further stability of rates was needed to restore market confidence fully. Like elsewhere, the trend of sellers prepared to negotiate was being established on the bluff, especially when sellers were presented with good offers. Berea-based Chris Pearson of Re/Max Address said the current market activity on the Berea remained below R1.5 million with little moving aboveR4 million.

“Most would-be sellers are holding back from selling because they can afford to and also because it’s not the best time to sell. “However, Pearson did say that inquiries remained generally firm.

Sibbald said even though it was clearly a buyers’ market, the latest data firmly trashed some of the cynicism about the market recently, which saw some experts claim that house prices had dropped by between 25% and 50%. “While this might be true of other areas our stats and figures strongly prove that property in the greater Durban area remains an excellent investment,” said Sibbald.

Problematic     

However, economist John Lottering of Rode & Associates, has urged people to remain grounded. He said the company had picked up a nine month lag between rising interest rates and the effect these had on house prices.

Erwin Rode said forecasting was problematic . “This time last year, things looked rosy for South Africa. The SA landscape for both the economy, as a whole, and for property in particular, has changed drastically since December 2007, and it’s hit us on our blind spot “. Rode said property rentals would probably increase as long as the economy grew at about 3% and building replacement costs remained fairly high.