The average home price in Johannesburg’s luxury property sector has risen by almost 13% in the past 12 months to R2,6 million, on the back of strongly increasing demand.
That’s the word from Lew Geffen, chairman of Sotheby’s International Realty in SA, which specialises in high-end property sales. “For the past few months, public attention has been focused on big-ticket sales on the Atlantic Seaboard and in the Southern Suburbs of Cape Town -with a recent bumper sale on the Atlnatic Seaboard taking place at R200 million - but actually this sector of the market in Johannesburg has been just as busy.
“The number of luxury property sales has been climbing steadily in the past six months and in February,sales volumes were 8% up year-on-year, with most of the activity taking place in upmarket suburbs such as Sandhurst, Atholl, Inanda, Hyde Park, Bryanston,Westcliff and Melrose.
“There have been quite a number of Johannesburg sales recently in the R30 million to R40 million range, but the highest demand has been for properties in the R6 million to R12 million range, which currently account for about 30% of the properties we are selling.
“In addition, we have also seen the average home sale price in Parkhurst, for example, leap from about R2 million a year ago to around R2,5m- plus now, and a flurry of sales at prices between R4 million and R13 million in the Morningside market, which had been moribund for almost four years.”
Currently most high-end buyers, Geffen says, are well-to-do South Africans who have decided that now is the time to upgrade from their existing homes to more luxurious properties – “and have in many cases decided to pitch their own asking prices at levels that will enable them to sell quickly and get on with their plans.”
Indeed it is this readiness to sell, he says, that has really set the luxury sector alight again. “When the recession hit in 2009, most wealthy homeowners simply withdrew from the market to wait for better times – and better prices. Largely unaffected by the credit crunch, they were not in a position where they needed to sell, and they also did not want to lose out on their investments as overall property prices plummeted, so sales in this sector of the market essentially dried up because of a lack of stock.
“In the past few months, however, high-net-worth individuals in SA, as all over the world, have awakened from their ‘slumber’ and re-entered both the stock market and the property market en masse. Their equity in their existing properties has grown and the economy and property prices have also recovered since 2009 to the point where they don’t have to take a losson their initial investment when they sell, and they are seizing the opportunity to buy even more valuable properties while these are also still available at reasonable prices.”
However, Geffen cautions, there is still quite a way to go before this sector of the market gets back to normal trading volumes,so homeowners who are contemplating an upgrade should be careful not to read the recent additional activity as a signal to raise their price expectations again. “It is important to note that the average price increases we are seeing now are coming after a long period in which luxury home prices essentially remained static because there were so few sales taking place.
“In other words, we are still working off a low base and sellers need to focus,not the potential for raising their own asking prices, but on the unusually favourable upgrading opportunities this situation is creating, and how to make the most of them.”
SOTHEBY’S INTERNATIONAL REALTY
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