STUCK IN LIMBO
Residential property sales are reportedly down 20%-30%, with upper-end and first-time buyers retreating to the sidelines. The wealthy have been spooked by political and economic uncertainty, while entry-level buyers are being squeezed out of the market by
The old adage “safe as houses” has a somewhat hollow ring these days. Ask software engineer Craig Engelbrecht, who has had to postpone his move to the UK because he’s struggling to sell his five-bedroom abode in Bryanston. The house, built in the late 1980s on a sprawling 3,500m² stand, has been on the market for six months. The asking price of R7.2m has been dropped twice — initially to R6.5m and more recently to R5.8m. That’s 12% less than Engelbrecht paid for the property in mid-2014. But still no takers.
Elsewhere in Johannesburg, in Craighall, a super-luxury pile that fetched R21m in
2015 came back onto the market in 2016 at R19m. The house was eventually resold last year by Lew Geffen Sotheby’s International Realty, but for only R12.75m.
Cape Town-based estate agents cite similar examples of sellers battling to offload their properties, particularly at the higher end of the market where demand has cooled notably after a five-year bull run.
The Seeff Property Group reports that only two sales in the R20m-r26m range have been concluded in the year to date at the V&A Waterfront Marina — one of SA’S most exclusive residential enclaves. There were nine R20m-plus sales at the Marina last year, with prices as high as R40m. The pattern is the same in other wealthy Atlantic seaboard suburbs such as Bantry Bay, Clifton, Fresnaye and Camps Bay.
By midyear, sales in Cape Town’s upmarket R20m-plus sector had practically halved compared with the first six months of 2017, says Ian Slot, MD for Seeff Atlantic seaboard & city bowl. “That has taken about R500m in turnover out of the market.”
Slot believes the drop in top-end sales is a reflection of weak investor confidence as a result of political and economic uncertainty, prompting high-net-worth locals to withdraw from the market. Wealthy South Africans are generally not compelled to buy property and tend to take their money offshore, instead, when consumer and business sentiment take a dive.
It appears that foreigners have also beaten a hasty retreat, no doubt spurred by the government’s plans to amend the constitution to allow for land expropriation without compensation.
“Sales to foreign buyers have dropped by about 40% over the past two years and are sitting at around half of what they were compared with 2014,” says Slot.
There has been a simultaneous rise in the number of foreign home-owners putting their Cape Town properties up for sale.
Apart from a depressed economy and the land expropriation issue, Slot also blames the drop in sales on Cape Town’s water crisis and the DA’S poor handling of the proposed sacking of mayor Patricia de Lille. A decline in tourism and semigration has put a further brake on demand, he believes.
It also has to be said that a correction in Cape Town’s residential property market