Record Atlantic seaboard sales as locals snap up trophy homes amid demand
IN A RECORD sales month along the Atlantic seaboard, Lew Geffen Sotheby’s International Realty has concluded deals for properties cumulatively valued at R120 million.
This comes as banks relax lending criteria and ooba records its highest lending figures in five years.
“Prices for properties sold along the Atlantic seaboard started in the low millions and topped more than R30 million at the other end of the scale, with the average home selling for around R4m. This shows definitively that the high end of the market in Cape Town is recovering, with a particularly avid demand for the sea views on the Atlantic seaboard,” says firm chairman Lew Geffen.
“This recovery is not confined to one small area of Cape Town though; other big-ticket suburbs across the city have also been showing more market movement and this is mirrored in Johannesburg. That’s what I find encouraging, because an upswing confined to one suburb or one group of neighbouring suburbs does not make a trend.”
Geffen says that although South Africa’s industrial heartland of Joburg has been enjoying unprecedented sales with an average year-on-year trading increase of 40 percent, on the Atlantic seaboard the highend properties are particularly attractive to the foreign market due to the depreciating rand, which is seeing property cost 30 percent less than last month in relative terms.
Almost all of the buyers in the suburbs of Sea Point, Green Point, Mouille Point and Fresnaye have been South African, though, says Brendan Miller, chief executive of Lew Geffen Sotheby’s International Realty Atlantic Seaboard. He believes that banks’ increasing willingness to lend and favourable prices are driving the boom in sales.
The picture is the same across South Africa. Bond originator ooba recorded the company’s highest value of home loans approved in five years in May.
“The value of approved home loans in the month of May was 21.3 percent higher than in May in the previous year. May 2013 was also 362 percent higher than January 2009, ooba’s lowest month in the middle of the sub-prime, property and financial crises,” says Marius Crook, ooba Western Cape sales manager.
The latest Reserve Bank statistics released (for February) also show a 1.6 percent year-onyear growth in mortgage advances, mostly as a result of higher demand in the residential property sector. The country’s four major banks appear to be easing deposit requirements as well, although lending criteria is still strict.
“Although economic growth has slowed and the country is facing tough cost- of- living increases this year, low interest rates are still attracting buyers and those on the higher end of the scale are enthusiastically buying because, in relative terms, property is very affordable right now,” says Geffen.
Miller agrees, saying property prices along the Atlantic seaboard, one of South Africa’s most expensive real estate areas, have dropped in real terms over the past few years.
“At current levels there is great demand for homes, particularly sectional title properties, but as demand increases, prices will begin to reflect this too.
“A lot of local investors want to expand their portfolios in the current market conditions and much of the real estate on the Atlantic seaboard is of the lockup- and- go variety, which is becoming increasingly popular in those beachfront areas as Cape Town’s reputation as a prime t ourist destination grows,” says Geffen.