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High prices deter buyers in popular Johannesburg suburbs
Category Property News
Despite the wallowing economy, the appeal of property in upmarket suburbs like Inanda in Johannesburg hasn’t waned, although house sales volumes have notably slowed, and local agents say it’s not due to lack of interested buyers or available stock.
According to Lightstone, only 10 properties with a combined value of R79.8 million changed hands in Inanda in the 12 months ending 30 April 2017, with Atholl faring a little better at 24 sales realising R146.5 million, but Justine Roux, Area Specialist for Lew Geffen Sotheby’s International Realty, says there were many more potential sales which fell through during this period.
“One of the main reasons homes aren’t selling is that sellers simply won’t budge from their listing prices, despite the notable decline in investor numbers that has precipitated a shift to a buyers’ market,” says Roux.
She says many sellers in suburbs like Inanda, Illovo and Atholl have high expectations and low financial stress, which means they can often afford to sit out the tight economic conditions and wait for the market to improve - however long it takes.
“Most of them have second homes, and very few have mortgages, so there is no urgency to sell, with a growing number selling to move to the Western Cape or to downsize and move to smaller homes in the same area,” says Roux.
She says another negative knock-on effect of declining sales is that some agents resort to overvaluing properties in the hope of securing sale mandates.
“This is counterproductive, as buyers are generally far too astute to pay more than the market value for a property and, with diminished budgets, most are looking for more home for less outlay,” says Roux.
“The result is that these sellers are often eventually obliged to drop their prices, sometimes even selling for far less than if they had been realistic from the outset.”
According to Roux, sales volumes would most certainly increase if sellers were more flexible and open to negotiation.
“Not only do these suburbs tick the right boxes, this precinct also offers a wide variety of stock to suit all needs and most budgets,” says Roux
In Inanda, she says almost 50% of the properties are freehold estate homes, around 36% freestanding houses and 14% sectional title units, with a similar split in Atholl.
“In the largest of the three precincts, Illovo, the majority of homes are in sectional title schemes (81%), with 14% freestanding homes, and the balance being freehold and sectional title units,” says Roux.
She says sectional title units are moving more quickly than freehold homes, as more people are opting for the convenience of a lock-up and go lifestyle, the cost effectiveness of low-maintenance homes and the accessible pricing.
“We are finding that more young families want to move into the area, as well as young professionals who want to be close to Sandton. Because of the high transfer duty, many buyers look for slightly cheaper homes that they can renovate over time,” says Roux.
“If you buy a R6 million home and transform it into a R10 million property, the savings on transfer duty are significant.”
Roux says prices haven’t dropped in the past two years, but there is far more stock than in 2015.
“Freehold homes range between R5 million to R30 million, and you can buy sectional title units from R2.5 million to R7 million,” she says.
Conversely, Roux says the rental market here is booming, and secure upmarket homes in the area are particularly popular with corporates and the international market.
“It is becoming quite common for investors or developers to buy old houses on sizeable properties with a view to developing one or two cluster homes on the site. The demand is such that they can easily let the existing house while they wait for the rezoning process to take place,” says Roux.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says two of the main drawcards of the Inanda, Atholl and Illovo precinct are its convenient location and the fact that it is an established, family-friendly area.
“This has changed the resident demographic in recent years, and it is now home to many young professionals and creatives who work in Sandton and nearby business centres,” says Geffen.
There are also many top-class amenities in close proximity, including the elite Inanda Club, an iconic polo and equestrian landmark, Wanderers Stadium, shopping destinations like Hyde Park and excellent schools such as St David's Marist, and primary and high schools in Inanda.
“Atholl is known for its tall, lavish buildings, beautiful tree-lined streets and many different entertainment and shopping facilities, including the popular Atholl Square, a convenient neighbourhood centre,” says Geffen.
“These three suburbs truly have something for everyone and, with an adjustment in sellers’ expectations, could enjoy a stronger market than many other areas.”
Author: Lew Geffen Sotheby's International Realty
