So says Lew Geffen, chairman of Sotheby's International Realty in SA, who adds that the number of "big ticket" sales over R4m made by his Johannesburg offices over the past six months is 21% up on the number of such properties sold in the first half of last year.
"And much of the additional activity has taken place in the past couple of months, which have seen the especially notable sales of a property in Bryanston for R50m and another in Sandhurst for R35m.
"We have also seen a 45% increase in the total value of luxury properties sold over the past six months, compared with the same period of 2008, with the average unit price in this category rising from R5,94m to R7,14m."
Grenn Norton, broker/owner of RE/MAX Bryanston, agrees with Geffen that big ticket sales are definitely picking up – and they are cash. "These include a R10m sale in Bryanston, a R6,5m sale in Eagle Canyon and a lot of other sales in the R4-5m bracket."
"A lot a buyers are taking advantage of buying up in a down market, for example, a home that would have sold for R6m is now selling for between R4,5m and R5m. That's a 25% discount."
Geffen says sales at the top end of the market are usually not directly related to a decline in interest rates such as seen since December, but rather a function of improving economic sentiment. "Many big ticket purchases are made with cash, so buyers don't really have to worry about home loan interest rates. They tend to be much more influenced by an increase in business confidence and medium to long-term economic and employment prospects that will drive future housing demand.
"I have been through five previous recessions in the real estate business and have seen this type of buyer correctly anticipate the market recovery every time."
"I am not suggesting, of course, that prices across the board will immediately start rising. The main reason why the market is stabilising and unit sales increasing is because prices have come down substantially and buyers are making an effort to get in near the bottom. Sellers who think the halcyon days are back again are mistaken as prices are likely to remain at these levels for some time to come."
Norton says what is slowing the market down are the vast number of homes that are for sale at the moment, the banks' loaning criteria and sellers' unrealistic expectations as to what their home is worth. "The sellers still have not come to terms with the market downturn, ask too much and as a result the property sits in the market for months and ultimately sells for less than market value because of overexposure.
"Often we sell the property only for the bank to either decline the purchasers a bond or not find value in the home against which the bank will be registering a bond. What I am also finding at the moment is that a lot of parents are helping their children get into the market, by paying the required deposit on their behalf. Another factor is that the buyers are budgeting for interest rates to increase and thus are making lower offers." - Eugene Brink
For more information contact Lew Geffen on 011 886 8070 or send an email. Click here to visit the website.
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