The real estate market in KZN remains resilient despite a series of unfortunate occurrences within the region, including recent riots and flooding. Grant Gavin, Broker/Owner of RE/MAX Panache, explains that the demand for real estate is in part owing to the attractive outdoor coastal lifestyle that the province offers residents.
What is the current state of the market?
Despite the external circumstances, KZN continues to have the second highest median asking price in the country. As per Private Property stats shared in the latest RE/MAX Housing Report, the median asking price in KZN is R1,720,000 which is second to the Western Cape at R2,500,000. According to Lightstone, Coastal areas are growing in price more than non-coastal areas.
“In Durban North, residential homes have an average selling price of R3.5 million. In La Lucia, prices average at around R4 million. In Glenashley, the average price is around R3.4 million, and in Umhlanga, prices average R4.5 million,” says Grant Gavin, Broker/Owner of RE/MAX Panache.
As a possible explanation for the ongoing demand on the KZN North Coast, Gavin explains that there has been a significant shift in buyer behaviour since the pandemic. “Purchasers are seeking properties with attractive lifestyle benefits. People no longer need to work from an office and can therefore choose a property that offers lifestyle benefits as opposed to proximity to work. The KZN North Coast provides exactly that. With a natural coastline as a border, there is a narrow corridor of land from Durban heading north between the N2 and the ocean. Not only is coastal land extremely valuable, but with our year-round warm climate, warm ocean temperature, and access to KZN game reserves, it really is an attractive lifestyle option and one of the best places to live in South Africa,” says Gavin.
However, he notes that as with any major external event, such as recent riots and the recent flooding, there is an immediate impact on sentiment in the market and the initial period that follows sees a softening of demand.
“The market did go quiet initially. However, the bounce back has been quick, largely owing to the affordability that the low interest rates brought to the market. Obviously, certain areas were impacted more than others and where massive infrastructure work is needed, the bounce back can take longer. The positive stance to take in areas such as these is that when rebuilding, investment flows and infrastructure tends to be improved, which can have a positive impact on the long-term prospects of that area,” says Gavin.
Impact of interest rate hikes
Factoring in the latest interest rate hikes and how that might affect demand, Gavin adds that interest rates are the single biggest factor that impacts demand in any property market.
“The recent interest rate hikes have not had a major impact on our market just yet; we certainly have not seen any significant slowdown in the North Durban suburbs. This is due to current rates, although higher than 2020, being at a level that are lower than our historical interest rate averages in South Africa. Should the interest rates continue in their upward trend, we will see the impact on affordability eventually start to kick in and, along with other inflationary economic pressures, a shift in demand will naturally occur,” he predicts.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, echoes these predictions but adds that it is difficult to know exactly what lies ahead for the greater South African housing market if interest rates continue to climb.
“My advice is to prepare for the worst and to expect the best, because the South African property market has continued to perform far greater than predicted across all regions ever since COVID struck back in 2020. Still, it is always better to be well prepared and not need it, than to be unprepared if things do take a turn for the worse,” he concludes.
Writer: Kayla Ferguson