Downturn in Plett property sales mirrors South Africa's economy
Category Property Sales in Plettenberg Bay
Plett's property market has seen a downturn during the first three quarters of the year between January and September.
While there has been a drop in sales compared with preceding quarters, it appears the lag in sales, down 40% since January, that is reflected in property transfers by the Deeds Office for Plett, shows the trend might be consolidating at a lower level.
The drop in property transfers for Plett reflects a national trend. The FNB property barometer for August which indicates price growth trends reflect the downward pressure on asking prices. The FNB House Price Index has declined from a high of 4.2% in 2021 and 3.5% in 2022. This year's growth has slowed even further from 2.8% in January to a negligible 0.8% in August.'
It also states that in line with deteriorating affordability, buying activity continues to decline across the spectrum, with volumes now at pre-pandemic levels. Our indicators suggest widespread downscaling in the market, supporting buying activity in lower-priced brackets.
In Plettenberg Bay there are only two price brackets which has seen positive upward activity in the third quarter, in the R10m to R15m (up 50%) and the R15m-plus category (up 38,46%).
The largest fall in sales has taken place in the R0- R1m price bracket (-71,2%). This is directly linked to entry-level vacant stands, the supply of which have almost dried up.
The second largest fall in sales is in R1m-R2m (-52,68%) bracket linked to vacant stands and entry-level apartments.
The smallest decrease (-5,13%) was in the R4m - R5m bracket.
The buoyant market and attractiveness of Plett, especially as a "semigration" destination, has led to reduced stock being available and the number of active houses for sale do not justify the numbers of agencies and agents. Helen Ward, principal of Helen Melon Properties, says the comparison of the number of agencies and agents now active in Plett makes interesting reading. In 2019 (during the last downturn) there were approx. 10 agencies. Today there are over 50 agencies active in Plett, with only about 20% involved falling into the traditional "main street" agency category.
This has seen a rise in activity in the property market in Plett - with basically the same number of houses on offer (there have been no new large-scale developments in the town)
In general, economic conditions with looming inflationary threats and high interests rates are having an effect on consumers who are finding it more and more difficult to meet monthly bills. These economic pressures appear to have filtered through to the property market, where home owners and prospective buyers are feeling the effects, linking affordability to homeowenership.
Recent figures compiled by Moneyweb also make interesting reading about how emigration has affected the country's economy. SARS data shows that over 40 000 tax payers have ended their tax residency in the last five years.
The number of members medical aids have shed in recent years, not necessarily reflect emigration trends, but definitely the economy. Discovery has indicated a drop in the number of principal members by over 13% in between 2012 and 2017, and 26% in the past five years up to 2022.
Another trend observed on social media affecting house prices are the urgent emigration sales of properties between R3m and R5m across South Africa.
The Johannesburg market is described in the industry as "broken". Sellers aren't prepared to "give their houses away at low prices" to raise the funds for purchasing in Plett.
"This has an effect on the Plett market which signifies that sellers should consider the importance of correct pricing - and not seek excessive selling prices," says Ward.
The recent property industry mantra was: "Location, location, location...".
Today this appears to have switched to: "Price, price, price...", a reflection of current economic realities.
Author: Helen Melon Properties