Pam Golding Properties CEO Andrew Golding says high earners are not buying the expensive properties they once did, preferring instead to go abroad. Picture: SUPPLIED
Pam Golding Properties CEO Andrew Golding says high earners are not buying the expensive properties they once did, preferring instead to go abroad. Picture: SUPPLIED

Pam Golding Properties, one of SA’s largest estate agencies, says a low-growth economy and increased emigration has left home selling in a lull.

The luxury home market sales volumes and prices have taken a hit, and the highest price fetched for a property in the past year was R50m — down from R100m in 2017, the agency says.

In the first quarter of 2019, national total unit sales of 137,543 were just over 11% lower than the first half of 2018, according to data from Lightstone.

Total housing activity across the country had slowed from a peak of 210,465 units sold in 2015 to 196,375 units in 2017 before rebounding modestly in 2018. In 2018 197,634 units were sold.

“While I am always surprised at how resilient our housing market is, I must say things are very, very tough out there. Unemployment levels aren’t easing and affordability across house price bands is under pressure, so we find that houses priced around R1m sell the best, but there is less joy elsewhere,” CEO Andrew Golding said.

Pain spreads

The pain is spread across the country, with national house prices rising 3.21% from January-September compared with 3.99% for the same period in 2018.

Gauteng and KwaZulu-Natal’s average house price inflation was at 2.43% and 3.15% respectively over the first nine months of 2019. The Western Cape’s average house price inflation may have been the best at 5.78% but this was a drop in relative growth for a second year in a row. Cape prices grew about 10% in 2017.  

In 2019, residential sales on Cape Town’s Atlantic seaboard have also been at their worst level in a decade since the global economic crisis as more high-end buyers choose to invest in properties overseas or in other parts of SA which offer newer luxury houses.

The Western Cape has lost some of its popularity as a place where people from other provinces, especially Gauteng, move to start new lives.

People are choosing to move to the north coast of KwaZulu-Natal and to George where houses might be newer and offer better value as they require fewer renovations, Golding said.

“It is tough out there as more people sell to emigrate and fewer foreign buyers purchase luxury houses,” he said.

Emigration sales have risen to 13.4% in the second quarter of 2019, which represents a 10-year high.

“While emigration sales are highest for the upper-income groups, the increase in middle and lower price band sales due to emigration could reflect people selling their investment or holiday homes,” Golding said.

SA’s rental market is also battling, with rental rates falling from 7.4% in the first quarter of 2017 to about 3.9% in the first half of 2019.

Real inflation adjusted rental growth declined by an average 0.5% during the first half of the year, according to PayProp.

However, Golding said his group had still managed to maintain healthy sales, with turnover of just under R18.8bn for its financial year to February 2019. From March to September, it achieved a turnover of R11.6bn. The group had its record year in 2006 when its turnover breached R20bn.

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