To gauge current trends and movements, we posed a few pointed questions to a selection of Chas Everitt Brokers and Managers from areas in and around greater Johannesburg to gauge what their feelings where on the market, and particularly the Johannesburg middle priced property segment at present.
What’s the overall performance like in the so called “middle segment” of the property market in Johannesburg?
Dave Pride, Manager of the flagship Chas Everitt Randburg franchise noted “The middle segment of the residential Johannesburg property market (which we take as being homes priced between R500 000 and R2,5 million) is currently performing very well and has enabled many of our Johannesburg franchises to achieve record sales numbers in recent months.
Correctly-priced properties are now often selling within two weeks, which means that agents have to work much faster now to replace stock. We are also getting big turnouts and multiple offers and show days. One home recently put on show in Randpark Ridge, for example, drew 75 couples and five competing offers within hours.”
Diane Cross from Chas Everitt Edenvale and Bedfordview also commented: “One worrying aspect of the current rush to buy, however, is that there are lots of offers being made “subject to” the sale of the buyer’s existing property – and before those buyers have really done their homework on prices. Then if they can’t sell for what they expect, there is disappointment all round. Consequently we would advise that it is still much better to sell an existing property before you consider buying another.”
Which middle segment suburbs in the region are showing strong performance when you consider demand and home price growth?
Some of the highest demand suburbs in the Randburg/Roodepoort/Johannesburg region currently are the likes of Randpark Ridge, Sundowner, Northcliff, Bromhof, Northwold, Fairlands, Blairgowrie, Linden, Northriding, Boskruin and the Eagle Canyon Golf Estate according to Estrelita du Pisani from the Chas Everitt Randburg operation.
Jacques Bronkhorst from Chas Everitt’s Glenvista franchise added “From a Johannesburg property perspective there is also high demand in the New South in suburbs such as Glenvista, Bassonia and Mulbarton.
However, it is important to note that while high numbers of sales are driving prices up across the board, the rate of growth is not likely to hit the heady heights reached during the last boom because buyers are extremely value-conscious and because the banks are still very conservative when valuing properties on which they are being asked to grant bonds.”
What is it about these suburbs that cause them to be attractive to prospective property buyers?
“The perceived higher security in some of them because they are boomed or limited access areas, the presence of excellent public and private schools, easy access to the freeway system and convenient shopping malls” was the feeling from Werner Van Schalkwyk who operates in the popular Ruimsig area.
In terms of the types of properties, which are the most in demand or popular for the middle income sector?
“Sectional title apartments and townhouses as well as clusters and family homes are the most popular with buy-to-live purchasers. We are also seeing a rise, though, in investment or buy-to-let purchasing, and these buyers tend to prefer sectional title units”, was the feedback received from Owner Broker Phiwe Myeza from Chas Everitt Midrand.
How does the middle priced segment comapre when bench marked against the lower and higher segments?
When comparing the middle segment with the upper segment (homes priced at more than R3 million), the latter is not as active for two reasons.
“The first is affordability, of course, because there just are fewer buyers in that segment, and the second is that sellers in that category are generally not in a hurry to sell and are often not really negotiable on price” says Steven Roberts from Chas Everitt Sandton.
“Having said that, though, there is a great deal more activity now in the upper segment than there was five years ago, just as there is higher demand at the lower end of the market” he added.
How would you profile the mid priced buyers in terms of income bracket and their property needs?
Estelle Marais who heads up the Chas Everitt franchise for the Roodepoort and Krugersdorp regions had this to say; “By far the majority of buyers in the middle segment are salaried people, because the banks are still extremely reluctant to give bonds to self-employed people, no matter what their income. We find that most buyers at present are aged between 30 and 50, and they can earn anything from around R20 000 a month to about R80 000.”
How does the middle priced segment handle the financing of the property?
“We are seeing some cash deals and some 100% bonds but generally purchases are still being financed with home loans and deposits of between 10 and 20%” says Ronell van Niekerk from Alberton.
“Investors, we find, are also accessing equity from their existing homes to use as deposits to acquire buy-to-let units.”
In terms of the overall recovery of the market post the financial crisis, how would you assess the recovery of the middle segment relative to other segments?
The higher segment appears to have recovered faster as buyers saw opportunities to upgrade at massive discounts, but there is now much more activity in the middle segment or “backbone” of the market, while the lower segment appears to be feeling the effects now of the rising costs that put household incomes under severe pressure noted Andre Van Der Merwe, Principal of the Chas Everitt Benoni franchise.
What is the outlook for this sector going forward?
“Excellent, we would say, with the demand for home ownership rising steadily alongside the rapid increase in the number of middle class South Africans. This number has more than doubled from 1,7 million adults to 4,2 million in the past eight years and there is also a growing appreciation of the benefits of buying a home as opposed to renting concluded Chas Everitt’s Group MD, Berry Everitt.