Search
Close this search box.

Lack of confidence mars Johannesburg property market

Lack of confidence mars Johannesburg property market

MAIN IMAGE: Michelle Cohen, principal practitioner of Leapfrog Johannesburg North East, Jonny Novick, CEO of Vered Estates, Bridget Aspinall, estate agent at Firzt Realty Company Parkmore, Valerie Berkow-Kaye from Firzt Realty Company, Illovo & Melrose, and John O’Reilly, a rentals agent with Seeff Randburg

Editor

Fires, explosions, excessive municipal rates, potholes, and load shedding – the recent media coverage about Johannesburg paints a grim picture – and seems to be fueling increased semigration to other provinces.

“The property situation in Johannesburg has been feeling pretty dire.  The negativity is affecting the sale of properties”, shares Michelle Cohen, principal practitioner of Leapfrog Johannesburg North East.

Jonny Novick, CEO of Vered Estates says “We’ve noticed that many sellers aren’t leaving because they don’t like Johannesburg, they are often semigrating because they are fed up with how badly the city is being managed. The most frustrating thing is that none of our problems are insurmountable, in many cases, they boil down to bad management. Just look at what happened when we hosted BRICS – potholes were fixed, traffic lights were repaired, and street signs were repainted. These are basic things, but it shows it can be done”.

What is happening with the JHB property market?

Property Professional has reached out to several agents working in and around Johannesburg to get their ‘on the ground’ perspectives.

  • It’s a glass-half-full situation for buyers

“Like with everything else in life, a dire situation leads to opportunity for the people who choose to see the glass as half full as opposed to half empty. Realistic sellers are getting offers from buyers who can perform, and smart buyers are looking hard and getting into suburbs that a year ago may have been unaffordable for them.   Smart investors are also around and can pay cash”, says Cohen.

Novick agrees saying that while there has been little price growth for sellers, buyers are making the most of discounted prices to move into better areas.

  • Back to work is helping

“Joburg is still the business hub and many corporates are now insisting that their employees return to the office, at least 3-4 days per week. This is assisting us, especially with professional buyers coming into the marketplace, realising they cannot all semigrate and that perhaps now is the time to buy and to capitalize on market conditions and /or upgrade.

Recently we are seeing properties in the R5 million market attracting more buyers, which was not the case a couple of months ago” shares Bridget Aspinall, estate agent at Firzt Realty Company Parkmore.

  • Rising municipal rates are an issue

“The increasing levies of sectional title apartments, along with increased rates and taxes have made this kind of lifestyle unaffordable which has resulted in fewer sales and more rentals taking place.  This impacts future developments as the demand for sectional title property decreases”, believes Valerie Berkow-Kaye from Firzt Realty Company, Illovo & Melrose.

Novick concurs that rates and taxes are becoming prohibitive, “The sad fact is that property values are not increasing in Johannesburg, we have sellers who are lucky to sell their properties at the price they bought it for several years ago. The municipality’s claim that higher rates are due to increased property values is false, proving very problematic for sellers who cannot sell at the supposed value of their property, while also having to shoulder the financial burden of these new rates.” 

  • Buy-to-let opportunities

John O’Reilly, a rentals agent with Seeff Randburg says the area is particularly popular and has a dynamic rental market with huge demand. There are excellent opportunities for buy-to-let investors with apartments, townhouses, and free-standing homes sought by tenants.

 One and two-bedroom apartments in the R 800,000 to R1.5 million bracket offer good rental returns. Also in demand are houses, both free-standing and those in complexes and estates in the R1.2 million to R2.5 million range, specifically in Randpark Ridge, Boskruin, Northcliff, Fairland, Linden, Weltevredenpark and Greenside as these areas attract more long-term rentals which provide good long-term returns.

  • Sellers need to hold off, if possible

Cohen believes that the interest rate may start to move on a downward cycle at the November Reserve Bank meeting and once that starts the impact on property prices will be felt early next year.  As is usually the case in the property cycle we should see a recovery in pricing toward the end of next year. She advises sellers to hold off on selling unless they’re serious about doing so now. If so, they need to be open to negotiation “If you’re selling in Johannesburg and you are serious flexibility is the name of the game!”

“Johannesburg isn’t a world-class city, but it could be. Local government needs to restore confidence by improving management and service delivery, it won’t just improve quality of life but will do much to restore confidence in the property market as well”, believes Novick.

Share this article:

more top news stories