Are stock shortages in Cape Town real or perceived?

STOCK shortages: a well-known phrase in the property market, particularly in Cape Town where it is often used to describe just how in demand properties are in this part of the country.

But are these shortages real or are they just perceptions fuelled by other factors?

Data and analysis from the two-quarter averages in both summer 2016 and 2017 showed that 35% of agents surveyed reported stock constraints in Cape Town, says John Loos, FNB Household and Property Sector strategist. This was the highest percentage of residential stock constraints in all the major metro regions in the country.

However, there appears to be more to the so-called shortages than meets the eye.

“There are far too many agents in the area to share the amount of stock available, hence the greater feeling of a shortage,” says Marlene Allul, sales associate at Re/ Max Living. Previously there were more buyers, so stock sold quickly when it came onto the market.

This sentiment is partly echoed by Kevin Jacobs, broker owner of Re/Max Premier, who lists one of the reasons for shortages on increased competition between traditionally strong brands in the area and new entrants or other brands that have grown.

Additionally though, he says migration from the north is affecting demand, with stock at the right price “moving fast” and placing additional pressure on stock levels.

Some specialists believe stock has increased in certain parts of the Cape market, with Mike Greeff, CEO of Greeff Christies International Real Estate, saying although constraints were evident last year, he has seen a “significant increase” in stock, particularly in developments over the past few months in several areas. “We also have two new upper Constantia developments listed, which adds 16 new homes to the area.”

Another issue contributing to perceived “stock shortages” is the unavailability of properties in high- demand price brackets, says Francois Venter, director at Jawitz Properties.

So rather than it being a case of no stock, there is “enough stock”, but not in the in-demand price ranges.

“This changes by suburb. For example, in Sea Point, the highest demand price range is at the R3 million to R4m level, so there will be a shortage of stock in that price range, but available stock in other ranges.

“In Constantia, there is virtually nothing in the R8m to R10m price bracket, but in the R10m to R15m range there is a lot. We also see overpriced properties, so a home valued at R8m may be on the market for R12m and not selling.

“But if it was priced right it would sell.”