The Jeffreys Bay property market appeared to have bottomed out in 2013 with a steady increase in prices of both plots and homes.
Marina Martinique in particular saw a surge in demand for property that saw prices increase for waterfront stands on both Phase 1 and Phase 2 of the upmarket development.
According to the FNB House Price Index, the average house price for January 2014 rose 7.9% year-on-year. The average house price of homes transacted was R 924,261.
In real terms, the FNB House Price Index remained well above levels of a decade ago, up 26.8% from January 2004.
However, compared with last decade’s price peak, reached in December 2007, real price was still -18.5% lower.
“Therefore, as at January 2014, real price levels remained well- above the levels of a decade ago, but still do reflect a significant cumulative downward “correction” since 2007,” said Johan Loos of First National Bank.
The biggest impact on the property market in 2014 will be the hike in interest rates according to Loos.
“The most obvious forms of demand to be constrained would be those that can be considered to be “luxury items” or non-essential purchases. Amongst these would be buy-to-let buying, along with holiday property buying.
Expect, therefore, that primary residential demand will remain “king”. This implies that, in our FNB Estate Agent Survey, we would expect to see estimated Primary Residential buying remaining at near to 90% of total buying, with buy-to-let, holiday property, and buying residences for others, remaining at around 10%.
This is very different to the boom years of last decade where buy-to-let buying alone was once estimated as high as 25% of total buying back in 2004,” said Loos.
“We would thus anticipate further acceleration in rental inflation, in a market already rumoured to have significant supply constraints, supported by the combination of rising demand and ongoing weakness in supply growth due to low levels of buy-to-let buying.
This may see rental inflation rising to higher levels than house price growth, bringing about a noticeable rise in residential yields,” concluded Loos.