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

Financial Mail - - FEATURES - Joan Muller mullerj@fm.co.za

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

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