Tony Clarke, Managing Director of the Rawson Property Group, commented recently that while the majority of Rawson’s 190 franchisees are making good progress and increasing their market share, those working mainly in the R500,000 to R1,2 million price bracket are “in the pound seats” right now, i.e. in the areas where demand is likely to be strongest.
This applies in every respect to the Wilgeheuwel precinct, which is situated 30 km west of the centre of Johannesburg. Wilgeheuwel has become a popular commuting base for Roodepoort, Krugersdorp, Johannesburg, Sandton and Pretoria. Frederick Lange, the young Rawson Property Group franchisee serving the Wilgeheuwel area, said that in his territory, the Lightstone figures show that there are just on 2,500 homes in security estates, 8,537 in sectional title developments and 1,680 freehold units.
The average sales price of the homes in the estates in recent months, said Lange, has been R911,000. In sectional title units it was R687,000 and in the freehold homes R1,022,000. This, of course, means that the area conforms in every way to Clarke’s prescription for high demand and it is an accepted fact that the area has established strong demand and rapid turnover for some three years now.
This, said Lange, is due to people moving to the West Rand from country districts and to a tendency within the area to upgrade if possible, but not to move elsewhere. Right now, however, he said, stock shortages are becoming a problem because some who previously would have carried on a regular upgrading process find that they cannot afford to do so these days and that under the stricter National Credit Act rulings they no longer qualify for bonds. This situation, he added, has been exacerbated by certain owners having bonds that are higher than their property values justify – and who now have difficulty servicing them.
Despite these negative aspects, the area sales are currently increasing by 2,5% per annum and prices are rising by 3,5%. Although demand remains high, he said, he does not foresee a big uptick in prices for at least another 18 to 24 months. His own sales turnover has risen by some 20% per annum since his first three months in this franchise, which he bought in August 2008. His five agents currently sell six to eight homes per month.
“Wilgeheuwel’s big advantage,” he said, “is that it offers real value for money. If you move even a few kilometres closer to Johannesburg or Sandton prices rise significantly and very soon become double what one would pay here.”
In these tight economic times, added Lange, it is essential for the estate agent to be able to counsel sellers adequately so as to ensure that they make no hasty or ill-advised decisions. It is also important to be able to assist buyers in understanding the credit rulings and to help them prequalify for bonds. Following this policy, he said, his team’s bond applications on behalf of buyers have had a success rate of over 95% in recent months – a very high figure for a middle bracket precinct.
“It has to be recognized that we are now operating in an economic climate where debt levels tend to get out of hand. This is shown by the fact that South African household debt is now equal roughly to 70% of the GDP. A good estate agent, therefore, has to be more than just a house seller, he has to be able to advise the client on the whole structuring of his finances.”
Like many other Rawson Property Group franchisees, Lange has testified that, although he did ‘all right’ in his previous independent house marketing operation in the same area, since linking in with the Rawson brand his sales have improved out of all recognition. In fact they have almost trebled. What is more, he expects a further 40% increase in turnover in the coming 12 months.
