I had the pleasure of attending a Pam Golding function in Hermanus. In greeting Andrew, I complimented his Mother who was the Founder of Pam Golding Properties over 40 years ago. An outstanding lady and businesswoman who drove a powerful ethos into Pam Golding estates over her many years. I believe she also oversaw the transformation of Pam Golding from an elite-area agency to an agency for “the normal man”, bringing all the class and expertise to that market’s operation without detracting from the sophisticated positioning of the Pam Golding brand.
She also oversaw the transition from her own dynasty to her son as the guardian and driver of the business into the future. I’m sure she was tough on her “boy” as he too transferred from Medicine to Property to take his place in an arena he had no doubt grown up in around the dinner table. With genuine praise, he has done that very well indeed, continuing to uphold Pam Golding as one of the iconic businesses in our industry.
He had a team thereof himself, Golding’s economist and Strauss Daly, the attorneys. Here’s a synopsis of what they spoke about. A little parochial but I’ll add some comments at times.
- Properties are moving given that Sellers are getting realistic as regards the value of their property in the current market.
- Prices are down about 20% compared with one year ago. Secure estates flying in the range <R2.5m. This is attributable to the continued perceived security threat but also due to downscaling from larger properties.
- Stellenbosch is flying with this town being the #1 Pam Golding office in the country.
- The value of a house that lingers on the market declines at 1.5% per month. This was an amazing comment that I have heard but never taken too seriously. I can now understand why friends have removed their homes from the market and then put them back on.
- House prices slowing are slowing which we all know but seemingly at a slower rate according to the latest research.
- 7% (14% in my opinion) of house sales are for the purpose of emigrating. But, according to Andrew, many sellers are not actually leaving but are rather renting and then investing in golden VISA countries eg Malta and Mauritius. Apparently, the latter country is very active indeed.
- Semigration has slowed to Cape Town. People are now choosing PE and Durban for similar lifestyles but with much more property value. PE is now the top growth market for house prices, whilst Cape Town has been declining rapidly
- Hermanus [I knew we would get a mention ☺] is now attracting young buyers in the <R2.5m price range. As I experienced in George many years ago, many people place their families here but then fly to work in Joburg or internationally. Hermanus is beginning to carry value in all price ranges but I can attest to the 20% reduction in asking prices. I have two examples this month of sellers of newly built or renovated homes just getting their cost price or a little less after commission.
- Andrew agrees with us that a primary underpin of sales these days is the willingness of banks to lend. Their growing or defending of market share is driving sales.
- This slide caught my imagination. Consumer Confidence = The Great Depression. That is really sobering and I’m not sure how we’re selling anything if that is empirically true.
- First-time homeowners are changing the structure of the market. Millennials are moving to growth points eg Claremont. Pods, which I experienced at the new Dubai airport some time ago and read about in Japan, are being built and sold. R1m buys you 24m2!! A parking bay then sets you back a further R250000. Point is that if you have a hectic social life or choose to avoid the traffic every day, such an investment may be realistic. Rental pools exist in these apartments if you wish to “timeshare” your unit.
- The Retirement market is robust which is quite obvious for two reasons: We’re ageing and many people cannot consider going offshore. KZN is repositioning itself to these buyers but the Western Cape is still outperforming all other markets.
- 10 of the top estates are in the Western Cape.
- House prices remain at an absolute premium within 500m of the sea.
- The Coronavirus has the potential to infect 58% of the global population. The only good news on this point is that deaths from infection are only 1%. Small comfort ☹
- Ramaphosa is not as strong as we need him to be, neither as a leader nor as a politician. We are advised to watch the upcoming ANC NGC.
- Asked about property values, we are all waiting with bated breath – to downgrade or not to downgrade, that is the question. However, Andrew is realistic when he says that a downgrade will have negative sentiment value if nothing else. The hope is no downgrade but if so, it will affect property values.
- A fascinating statistic from Japan: 30% of houses are empty as older people move out to smaller properties.
Andrew was asked about EWC. His answers were sensible. Firstly, that he hopes the matter will be settled between the Executive and the courts in such a way that recourse to the courts is allowed so that sensitive matters can be handled properly. Secondly, that we should not expect residential property to be included; it is occupied and used-for-purpose and any attempts to do so would be sensational. Thirdly, that land redistribution is an unfortunate consequence of our past but if handled correctly by ALL, he would hope it contributes to a lasting solution and economic prosperity in our country. The question is obviously on his mind and he answered it in a very level-headed manner as any business leader should.
In closing, the presentation was a privilege to attend and a feast of information. It is quite obvious that the global property market is experiencing enormous change. A friend of mine who is emigrating to the UK has been watching the guesthouse market very closely. Many of them, up to 11-bedroom, B&B’s of about UKP500000, have been on the market for 18 months or more. It seems that kind of money is not readily available, but on the other hand, perhaps Brexit has been hurting tourists and landlords alike.