Unless the KwaZulu-Natal government and local authorities deal with maintaining and improving the infrastructure in areas hard hit by the recent floods, the province will lose its appeal for investment property buyers, an estate agent believes.
Property markets in areas that were severely hit by the floods in April and over this past weekend, and had homes and roads washed away, are already seeing a slowdown in sales.
Some estate agents are confident that these areas will eventually attract interest again while others are not so sure.
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Roelof Faul, franchisee of Rawson Properties Ballito, which markets properties in Ballito, Tongaat, Salt Rock, and other North Coast areas that suffered property damage from the flooding, says that, since the first floods, property sales and inquiries have slowed down.
“Most holiday lets were also cancelled due to safety reasons which negatively affected the yield investors would have received on their properties.”
This, added to the looting in the province last year, the disruption of water supply during both flood periods, the rising interest rate, and the return of load shedding in winter, adds to this “negative sentiment”.
“As a luxury/holiday/investment destination, it may slowly be losing its appeal as buyers and investors will tend to look at safer destinations...
“Unless the government and local authorities attend to the infrastructure, maintenance, and improvements, KZN will be seen as a no-go area, losing its appeal very quickly for holiday and investment buyers,” he says.
Activity in the Ballito and Umhlanga property markets has “definitely slowed down” since the floods, agrees Sabrina Errico, Lew Geffen Sotheby’s International Realty broker principal in these areas. Some properties have even been taken off the market due to damage, and some sellers have reduced pricing.
“Sadly, eMdloti has been hit the worst, and it will probably take some time for that market to revive as people had to evacuate, and the damage there has been devastating.
“Ballito and north of Ballito have not been as extensively damaged and, as the N2 highway took years to finish, we are used to the traffic being slow in this area.”
Most of the damaged properties are expected to be placed back onto the market as soon as they’ve been repaired, she says, although sellers are expected to be a “little more negotiable” on pricing. This is not a negative impact on the market, however as “vendors have demanding a premium with some even achieving asking price due to the stock shortages we’ve been experiencing”.
Furthermore, despite the damage, Errico believes that the areas should see positive growth “within a year or so as happened on the Garden Route after the recent fires”.
“Many of the owners who received insurance pay-outs sold the land instead of rebuilding and then bought homes elsewhere for cash, and this resulted in massive sales growth afterwards.”
The second wave of torrential rain over the past weekend has had a “very negative” short-term impact on the residential property market in the province, says Lee Ellis of Tyson Properties KZN. Potential buyers may also be sceptical in the near future to purchase homes in the areas most affected by the flooding.
“Primary and secondary effects of the flooding, such as water damage, collapsed infrastructure, power outages, and damage to the supply of water will pass. Tertiary effects, such as changes to the landscape, loss of vegetation, and habitat, however, are more long-term, and these issues may take longer to overcome.”
However, in time, once the damaged infrastructure is repaired, he says confidence will be restored in the local residential property market.
“Many homes that were recently damaged as a result of the flooding will need to be extensively repaired. The local municipalities and provincial government are collectively fixing and repairing the damaged infrastructure within the province, especially in eThekwini and nearby coastal towns.
“Initially the selling prices of homes in flooded affected areas may see a reduction in value but, within time, this will pass and potential buyers will again see the value in our local residential property market.”
In Amanzimtoti and Scottburgh on the KZN South Coast, Erine Kleyn franchisee for Rawson Properties there, says sales have declined since the floods. She notes though that it may be too soon to tell if this is due to the flooding.
“I think it is too soon to tell if it is due to the floods. We usually see a decline in sales when winter approaches, so currently it is hard to tell whether it is just the normal winter decline or the effect of the floods.”
Despite this, Kleyn says people will “definitely still buy in Amanzimtoti”.
“Amanzimtoti properties are still very affordable to a large group of people and therefore I can't foresee that (the floods) will affect the property sales in the future. The community stands together and is very positive to rebuild and survive these tragedies.”