HEIBERG ESTATES: MAY NEWSLETTER

PECAN PLACE VIDEO LINK: https://youtu.be/fTf27T15tkk

NEWSLETTER 5.1Dear Property Partners

With the much-awaited elections now behind us, hopefully all the political and economic uncertainties will be coming under control and the lethargic state of affairs and general mindset which has had a major impact on our Real Estate Market, will come to an end. We need renewed energy and consumer confidence, especially looking at prospective property investors, wondering where, if it is still safe to invest in our SA Property Market. Clarity and definite guidelines regarding land expropriation without compensation, needs to be established as a matter of urgency before we shall be able to attract renewed foreign interest and investments in our property market.

More than ever we see that a safe environment, close proximity to a good public transport system, schools/universities, shopping centres and hospitals, remain to be some of the most important factors that potential Buyers take into account before putting hand on paper to buy. Interesting to note that due to the ever increase of basic costs of living, the decrease of disposable income and limited affordability, prospective property investors especially amongst the younger generations/millennials, are starting to buy properties together in order to get their foot on the property ladder.

Limited yearly salary increases not keeping up with our inflation rate, also exclude many prospective buyers to keep up with the growth in property price increases and we expect this trend of co-buying, to increase in the future. Millennials are opting to invest in well-located, affordable sectional title units rather than trying to buy free standing homes, where more affordable sectional title units, offer them a good and secure lifestyle, preferably within close proximity to work and a public transport system. They know precisely what their levies, rates and taxes will be with no additional garden and maintenance costs or other unexpected expenses. Especially mixed-use developments, offering restaurants, green space, a pool and gym within the complex, are becoming more and more popular. Co-buying literally opens new doors to them and enables them to be a bit pickier as to where and what they buy as costs are shared. Also, interesting to note that banks allow friends/family to buy together and collectively get the mortgage agreement registered on all names as co-owners.

Some of the latest property related interest facts and statistics:

  • Not only have property selling numbers decreased over the last few years, but also lately rental properties are facing challenges. Empty standing rental properties are on the increase, leading to supply being stronger than demand – in its turn having an impact on monthly rental amounts coming down. Statistics show that in the first quarter of this year, empty standing rental properties nationwide, increased to 7% versus the 5.5% recorded the year before. The yearly rental increase amounts also reduced from an average 5,7% to 4,5%. The highest provincial empty standing rental property figure of 9,3%, was recorded in Gauteng.
  • There is however an oversupply of especially sectional title rental properties nationwide, one of the main reasons being where developers that would normally do commercial developments, alternatively decided on residential developments due to all the prolonged political and economic uncertainties and hoping to lessen their risk in the process. According to Statistics SA, more or less 58% more sectional title units were built over the past 12 months than the year before. Sectional title units doubled just in Gauteng! With the huge supply and decreasing sales figures, developers have no option than to opt for rentals and especially around the University of Pretoria, many units are standing empty due to oversupply.
  • Lightstone recently brought out an interesting report that shows that the top ten priciest streets for residential property in SA, all have house prices above R20m! The most expensive street in SA is Moneterey Road in Constantia, Cape with and average house price of just under R30m, followed by Ravine Road in Bantry Bay at an average of R27.5m and Logies Bay Road in Llandudno at around R27m – Llandudno also being the most expensive suburb in SA with house prices there averaging R18.6m.
  • Single women have become the biggest group of property buyers in SA – larger than married couples or men. Last year 72 000 single women bought properties in our country, versus the 62 000 single men that bought properties.
  • Whilst purchasing activities remains to be under pressure, first time buyers are still the most active and growing category that accounts for about 22,7% of all sales recorded during our first quarter. Pretoria has been highlighted as the most popular city where 29% of sales went to first time buyers.
  • The FNB House Price Index reported that year-to-date nominal house price increase was 3,6% – up 0.4% on the same period 2018 figures. Economists are on par in their expectations that 2019 property price increases will remain to be in the single low figures.
  • The existing oversupply of properties on the market, is definitely impacting and putting downwards pressure on property prices as supply exceeds demand by far, especially in the higher price ranges. We also experience at Heiberg Estates, that Sellers are holding back to put their houses on the market due to this reason, hoping that the general state of affairs will improve later in the year with hopefully increasing higher demand once our political and economic state of affairs are stabilising and a new, merited and smaller cabinet, get the grip on our fragile state of affairs again.
  • Transactions in within the affordable housing price range, are also on the decline – latest statistics for first quarter this year showing that it declined with 8,5% compared to the last quarter of 2018, whilst properties over R3m sold, declined with 0.8%.
  • Interesting to note the following regarding property sales recorded during the first quarter of this year:

29.2% of transfers was within the R400 000 price range;

24.4% of all sales were priced between R400 000 and R800 000;

25.2% were between R800 000 and R1.5m;

15.8% were between R1.5m and R3m;

5.4% of transactions recorded was over R3m.

With a successful 6th National and Provincial Democratic Election behind us, coupled with the good news last week that the SA Reserve Bank didn’t increase the repo rate and kept it unchanged at 6,75% (the lending rate stable at 10,25%), as well as a lower than expected inflation rate of 4,4% as recorded last month, we are looking forward to renewed business trust in our fragile economy in order to create sustainable jobs and enable people to buy properties.

We trust that a positive change in investment sentiment and specifically in our SA Property Market, will hopefully soon be reflected in rising levels of property market activity, more property enquiries, an increase in show house attendance and transaction volumes, and resulting in successful sales being concluded.

Never to let out of sight that through the high property transfer duties, property remains to be one of the biggest contributors to our GDP – our state coffers need it! Hopefully with the much awaited newly appointed, merited and streamlined Cabinet, there will be new impetus for the Government to invest in infrastructure projects, and rejuvenate our struggling construction industry.

Despite all the challenges in our fragile SA Property Market for a prolonged time now, property is still widely regarded as a secure asset that will increase in value over time. But we have to be realistic and well take into account the general post-election sentiment boost with high hopes of new beginnings, it is not expected to lead to a sudden overnight increase in market activity and house price increases.

We are truly excited to share with you the launch of a brand new, exclusive and very upmarket new sectional title development, PECAN PLACE, with a sought-after and very central location at 210 Giovanetti Street, Nieuw Muckleneuk and right on the doorstep to Brooklyn Mall:

http://www.heibergestate.co.za/hb/  or view the HD video:  https://youtu.be/fTf27T15tkk

Prices starting from R1,848m (transfer duties included) and also perfect as a buy-to-let investment where diplomats will love this high security, top of the range luxury units, ranging from spacious 2 or 3 bedroom units plus two amazing Penthouses! Don’t hesitate to call us to view – we are also on show Fridays from 14:30 – 17:00 and Saturdays from 11:00-14:30 or contact Bambie 083 654 3773 / Lauriann 082 858 7256.

Until next time, our very best and warm wishes to you all.

Sincerely

Bambie & Heiberg Estates Team

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