Prevailing market demand dictating selling prices of homes in upmarket Zimbali - Seeff
Economy / 18 November 2019, 09:30am / Dhivana Rajgopaul
DURBAN - With the high end of the residential real estate market typically resisting price reductions, the volumes tend to plummet when faced with a decrease in the demand.
This is what Zimbali Coastal Resort – the best example of the high-end residential property market in KZN - has experienced over the past two years, says Andreas Wassenaar, Seeff’s Licensee and Principal here.
Wassenaar said, "Zimbali has 1300 homes with over 100 of these in the R30m plus bracket and over 250 being in the R20 million to R30 million range. Conservatively there would be 500 homes priced in the R10 million to R20 million range".
The price bracket above R20m has seen sharp price reductions over the past 12 months. What was typically priced at R35m has been reduced to R30 million and what was priced at R25 million is now closer to R20m.
However, the larger price bracket between R10 million to R20 million has been slower to adjust – until now.
In a recent string of price reductions, Seeff Zimbali has reduced pricing on some of its key mandates within this bracket on the instruction of the sellers”.
Wassenaar continues some perfect examples of these reductions include a home that has been reduced from R16,95 million to R13,95 million; a home that was reduced from R12,95 million to R10,95 million and another one that was reduced from R15,95 million to R13,95 million.
"New listings are tending to start their life on the market at more aggressive pricing - understanding where the market is currently at - and therefore aiming to get the pricing right from the outset on the agent's advice," said Wassenaar.
The higher-end residential market is characterised by property owners that are rarely under financial pressure to sell and therefore would typically decide to keep pricing unchanged and simply not sell.
This can last for an extended time until eventually they realise that to finalise a transaction in any given market, the intersection of demand and supply is where the actual sale happens”.
Wassenaar added that the market eventually disciplines all sellers and regardless of what a seller wants from a property, how much they have spent on a property, what they bought it for or the length of time they have held the property for, the prevailing market demand will dictate the price.
"Prices are at first 'sticky' downwards, but eventually adjust to meet demand. This is good news for estate agents who rely on transaction volume to earn commissions," concluded Wassenaar.
R10 billion Zimbali Lakes Resort to offer residential developments and retirement options
The Zimbali Lakes Resort that is located in the northern parts of KwaZulu-Natal is set to be an attraction for holiday makers and potential homeowners.
The R10 billion pet-friendly estate offers residential, commercial, retail and retirement opportunities across the 350 hectare estate.
A media statement from when Zimbali Lakes Resort officially broke ground highlighted the economic opportunities that will result from the development. The economic opportunities include the creation of 35000 indirect jobs and 3000 permanent jobs upon completion of the development as well as an estimated R63 million in annual rates from the potential 2500 homes that will be located on the estate.