Surge in demand for Atlantic seaboard flats
DEMAND for sectional title properties continues to outstrip that for houses in Cape Town’s space-strapped Atlantic seaboard.
Michael Bester, Lew Geffen Sotheby’s International Realty agent for Mouille Point and the Sea Point beachfront, says that sectional title properties are moving more quickly and prices are increasing faster than houses in these areas, a trend that is replicated along this desirable coastline.
Along the Sea Point beachfront this year, for example, sectional titles are on the market for two months on average before being sold, though it’s not uncommon for properties to be taken up within the first week of being listed or before being advertised. Houses have taken about six weeks longer to sell, according to Propstats.
“Even though there are far fewer free-standing properties than apartments, they still don’t move as quickly as the flats,” says Bester.
In Mouille Point, where there are virtually no freestanding homes, the fierce demand, combined with a current shortage, has had a significant effect on prices, driving them up by more than 26 percent from last year, according to Propstats. This is more than double the national growth average of 12.1 percent, as reported in Absa’s most recent quarterly housing review.
The stock shortage on the Atlantic seaboard is partly exacerbated by the high proportion of cash buyers, who, Bester says, make up at least 70 percent of his deals.
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says: “In cash-rich areas such as this, sellers are generally not distressed due to bond repayments or potential interest rate hikes. They’re happy to keep their properties and watch prices rise.
“The high proportion of cash buyers also means buyers don’t have to worry about deals falling through due to bonds not being approved, so there’s less scope for the banks to limit growth through cautious lending.”
“If you want a seafront view, you can expect to pay R30 000/ m ² to R40 000/ m ² or more, whereas flats with partial sea views cost about R25 000 to R30 000,” says Bester.
One interesting quirk of the area is that as most of the properties are sectional titles, it’s virtually impossible for older buildings to be demolished to make way for new developments. As a result, there is a growing market for apartments in old buildings that can be bought more cheaply, and then redeveloped and refurbished to modern standards.
“This is particularly popular with people who are downscaling from family homes out in the suburbs and have a bit of cash to pump into well-situated refurbishment properties,” says Bester.
“This trend is likely to bolster the rapidly growing value of the area, something that hasn’t gone unnoticed by keen buyers around the country.”