Weekend Argus (Saturday Edition)
The best and the worst performers
AFTER years of double-digit price inflation, well in excess of surrounding Cape Town suburbs and above the national average of 4.1%, Basil Moraitis, Pam Golding Properties area manager for the Atlantic Seaboard, says property prices here were bound to correct as the rate of increase in house-price inflation became unsustainable.
“The extent of this price correction has been compounded by factors including the drought and water restrictions, as well as socio-political and economic factors such as rising fuel prices.”
Ian Slot, managing director for Seeff Atlantic Seaboard, Waterfront and City Bowl, says activity for the first six months of this year is down 20% in volume and 30% in overall value on the back of a notable slow-down in sales above R18 million.
“The slow-down has also resulted in a drop in the overall selling price for the Atlantic seaboard, from around R9m in the first half last year to R7.8m. For the City Bowl the rate has dipped from about R3.9m to R3.7m.”
Rents are also coming down with this section of the market under pressure, including the Airbnb and holiday rentals market.
“There has been a notable rise in the stock levels on one side and a decline in visitor levels on the other, which means that rates are under pressure,” says Slot.
However, when it came to sales volumes, the areas that fared best in the first half of 2018 were the City Bowl (+7.2%) and Hout Bay (+30%), says Arnold Maritz of Lew Geffen Sotheby’s International Realty.
In terms of sales volumes, the Western Seaboard (-5%) and Constantiaberg (-7%) fared the worst. Despite this, Maritz says Constantiaberg and the Western Seaboard showed the strongest price increase during the first half of this year, with the Atlantic seaboard and City Bowl faring the worst during this period.
Emarie Campbell, Pam Golding Properties area principal Western Seaboard, says the market was uncharacteristically quiet towards the end of 2017, before the ANC’s national conference, but 2018 started with a bang after the election of Cyril Ramaphosa and renewed optimism. This resulted in the area having a very good month in February.
But then the threat of Day Zero loomed amid concerns about water scarcity, and this led to many upcountry buyers putting decisions to invest in property on hold.
“There was a definite drop in unit sales, as well as price resistance from buyers, during the following few months. What we are seeing now is an accumulation of inventory and a levelling out of prices.
“On the rental front, landlords are adjusting prices to avoid having homes and apartments standing empty. Many tenants are seeing that rents have flattened, and are shopping around.”
Campbell says the new development inventory that has come on to the market has also lead to an oversupply of rental stock.
Chris Cilliers, of Lew Geffen Sotheby’s International Realty, says pockets of excellence, such as Stellenbosch and the Val de vie Estate, remain in demand and although activity levels are not as high as
When Day Zero
last year, good prices can still be achieved.
“Buyers are looking for value for money no matter what the price range. Banks are hungry for business due to the economic downturn so they are offering better products at more attractive interest rates to clients.”
She says Stellenbosch suburbs are in demand as well as established secure estates throughout the Boland. The retirement market is also good.
Price correction is also occurring in the southern suburbs, says Lindsay Beck, PGP’s area manager. Serious sellers are adjusting their original asking prices to current market-related pricing.
“While some buyers are still holding back, property that is priced correctly will sell.”
She says most of the sales in this market are below R10m.
Knight Frank’s Richard Hardie says areas like Rondebosch, Pinelands and Mowbray “continue to perform” , but the likes of Constantia and Bishopscourt have seen a slow-down in sales, especially at the upper end.
Tyson Properties’ Nick Pearson says the best performers in the Western Cape are the more affordable areas of the market. But buyers are “more than happy to come to the party” for well-priced homes anywhere in the province.
“The western aeaboard and southern suburbs have really thrived while the Atlantic seaboard and the luxury market have slowed down.”
Traditional school-going areas, especially areas around the southern suburbs’ tops schools, are still achieving good prices, says Mike Greeff, of Greeff Christies International Real Estate.
“The Atlantic seaboard has definitely been the area that has been affected most by the water issues and the weakening rand as interest from up country and foreign buyers has slowed down. Our top performing areas have proven to be in the R2m to R6m price bracket as average listing days have decreased from 76 days in January to May 2017 to 28 days for the same period this year.
“The middle-end to high-end market has shown an increase in listing days for the same period. Areas such as Southfield, Plumstead, Wynberg and Kirstenhof are increasing in value as affordability becomes more relevant.”