Weekend Argus (Saturday Edition)
LUXURY NOW WITHIN GRASP
Stats show prices of posh homes in the most exclusive areas are declining as battle for bargains grows
PROPERTY professionals say the industry, especially in the luxury residential market, is in the doldrums, but this can be good news for people with aspirations.
Figures just released by FNB confirm that prices of luxury homes – defined as properties starting at R3 million – are static or declining in many of South Africa’s most sought-after suburbs.
This means sellers are now more willing to negotiate so this is the best time to buy, says Rory O’Hagan, head of Chas Everitt International property group’s luxury portfolio division.
Recent FNB statistics show, for example, that the rate of house-price growth on the Atlantic Seaboard, which is the country’s most expensive area, fell from a high of 25.5% in the first quarter of 2016 to -5.1% in the first quarter of this year.
“Similarly, prices in Cape Town’s southern suburbs, including areas like Constantia, Bishopscourt, Newlands and Claremont, are currently declining at the rate of 2.4% a year after reaching a peak annual growth rate of 15.4% in 2015
“This sort of decline is a signal to savvy buyers that there is excellent value in some of the city’s most sought-after residential areas.
Schalk van der Merwe, franchisee at the Rawson Properties Helderberg Group, suggests buyers question whether a professional or a seller valued the property. “The last thing you want to do is make a cheeky offer only to discover the property was overpriced by a seller to begin with and you’ve still overpaid.”
Richard Hardie, chief executive of Knight Frank SA, says the market is very good for people who want to upscale because “they’ll get much more now than they would have previously. Prices have softened so they can now get something within reach”.
Hardie says it is also not a bad time to sell. If properties have been hanging fire, softer prices could mean an achieved sale.
“Yes, it’s potentially a good time for people with luxury homes to sell.”
O’Hagan says: “We have seen many sellers in Joburg’s top suburbs and luxury lifestyle estates all around the country reduce their asking prices in recent months.
“In Hyde Park, for example, new cluster homes that were for sale at R28m are now priced at R20m, and a home originally listed for R19m is now available for R15m.”
His company’s luxury portfolio teams in estates such as Val de Vie in the Cape Winelands and Zimbali in KwaZulu-Natal report a similar trend, with asking prices dropping in the past month from R16.9m to R13m, from R15.9m to R12m, and from R13.9m to R11.5m. This means that for people who want to upscale, there is now an opportunity to acquire more home for their money than they might have expected.
“On the other hand, those looking to downscale may be able to afford a more upmarket location or more luxurious finishes, while those who’ve been trying to break into the luxury sector may find they can afford to do so.”
The appetite for luxury property around the world is currently also boosted by volatility in equity markets, which traditionally prompts investors to turn to brick and mortar.
“Locally, it seems there may be an interest rate cut this month which would further boost demand. But as things stand, we are already seeing a positive response to lower prices in many of our heritage suburbs, where our luxury portfolio teams have sold homes worth more than R300m in the past few weeks.”