Cash buyers set standard for residential property market stability in Western Cape

Just how recession-proof is the Western Cape’s property market?  Very, says Laurie Wener, MD of Pam Golding Properties (PGP) Western Cape Metro region.

Priced at R14.95 million through Pam Golding Properties, this elegant and spacious family home in Constantia Upper in Cape Town’s Southern Suburbs includes four en suite bedrooms, voluminous spaces, a cathedral-ceilinged art studio and state of the art security.

But, she cautions, everything is relative, so if it’s an economic wobble you’re looking at, the Cape’s going to weather it with a flourish. However, if the worst came to worst, Cape residential property would still, in all likelihood stay in the best possible shape as a tried and tested investment. And there’s no apparent melt-down on the horizon.
“The Cape largely dances to its own tune and it’s probably the one place in South Africa where people really want to live. It’s also not the place anyone leaves unless they have to. And the thing is, we continue to have high quality buyers across all price ranges.”
The statistics back her up, for instance, more than 50% of Pam Golding Properties’ buyers in this region right now, have cash to pay for their property across the price range. It’s not all about the telephone number transactions on the Golden Mile, or the headline-grabbing record sales to Bishopscourt billionaires.  Lower priced properties are also drawing cash offers.
“It’s solid all the way through,” says Wener, referring to some cash buyers of property in the middle to lower price range, who are investors diversifying their portfolios in the face of fluctuating stock market performance. Others are sellers of family homes making a cash buy of smaller properties as their needs change.
“Cash still has a lot of cachet, while banks have yet to throw caution to even the lightest breeze. So bonds are still an issue.”
Then there’s that much-mentioned seller’s market. In some categories, there aren’t even places for sale, let alone at a price you could call average.
“What might put the brakes on a bit, is buyers’ real reluctance to spend more than their instincts tell them is enough. There is still a difference between the asking and the selling price – we mustn’t lose sight of the hype based entirely on the numbers that sellers and their sometimes reluctant agents apply to homes that just don’t stand up to the extra million. Check the sales stats to get the real picture.”
According to the Pam Golding Residential Property Price Index, while the Cape’s performance over the past three years has been scintillating, it’s currently being outstripped by KwaZulu-Natal in some categories.
That could be a case of catch-up as the rest of the country feels the love, or that, for various reasons, nothing to do with fundamental value, the Cape has peaked a bit.
“But as long as we continue to have buyers with cash, we have stability – and that’s what makes a market resistant to negative pressure.
“What makes cash offers a stabilizing influence on the market is that they translate into clean deals with no suspensive clauses. In fact a cash offer very often spurs other interested buyers to raise their bid immediately because there’s no wiggle room while waiting to see if there’s a hitch at the bond stage.
“The bottom line is, good property will sell at a good price. The Cape is a fortunate place for sellers right now and for the future, whatever happens. But reason must always prevail when setting the price. This is a sophisticated market that buys with confidence but remains value conscious within the framework of prevailing market conditions,” says Wener.

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