Cape of plenty – property more popular than ever

The Cape metro has once again come out tops in the country for house price growth with an average appreciation rate of 7.8 percent as at the second quarter of this year. It also ranks tops for confidence and market strength according to the latest FNB Property Barometer.

Chairman of the Seeff property group, Samuel Seeff, says there can be little doubt that the Cape and its property is more popular than ever.

“Aside from local buyers trading up and down, FNB again confirmed that the Cape continues to experience high levels of migration from other provinces including the country’s biggest economy, Gauteng. With that comes a rise in the demand for homes to buy and rent,” says Seeff.

“Lightstone data shows that some R18.5 billion worth of property has already been sold for the metro over the last year and most agents now cite a lack of stock rather than buyers as the biggest challenge for the market.

“Aside from a shortage of properties to sell in many areas, rental agents are also pointing to shortages to meet the demand for rental accommodation, not only at the bottom end of the market, but also in the more expensive suburbs.”

He says relatively new developments such as those at the V&A Waterfront and in the Cape Town CBD, which couldn’t find buyers five years ago, have now just about sold out and it would be difficult to find anything on the market for under R5 million at the Waterfront.

Almost across the board, property values in the various suburbs of the city are up notably. In some hot spots, price growth has significantly outpaced the average cited by FNB, says Seeff.

“On the Atlantic seaboard for example, the average sales price for the first half of this year, based on Propstats data, is around R7.3m, over a million more than last year’s price of around R6.1m.

“Tourists too are flocking to the city. Already a world-class destination, we will soon see more cruise ships as our very own cruise terminal gets under way at the V&A Waterfront. We may even see a grand prix as early as 2017 according to recent news reports.”

That Cape Town is the best run metro in the country is a big draw-card for investment, property included says Seeff. And, hardly a month goes by without yet another influential international tourism accolade added to an already impressive list of awards for the city.

“People come from across the continent and globe to visit, live and buy property here,” he says.

“Although confidence in the Cape remains strong, the latest business confidence index from SACCI (South African Chamber of Commerce and Industry) has put business confidence at a 16-year low. Add to that the economic impact of the energy crisis and poor perception of most provinces when it comes to service delivery and infrastructure and you can see the attraction of the Cape.”

This also affects confidence in property as a store of wealth, says Seeff. People are voting with their feet when it comes to the Cape, but are prepared to pay significantly more for property here compared to for example Sandton, the financial and wealth hub of the continent, and especially Pretoria, the country’s capital and governmental seat.

“In Sandton, only a handful of residential properties are sold for over R15m. In Pretoria, almost nothing sells for over R10m.

“In Cape Town however, a R20m sale now hardly lifts an eyebrow. Since the start of last year for example, about 82 sales of homes priced over R20m worth a total of almost R2.5bn have been concluded in the Cape metro. Seeff alone has sold a number of homes in the R40m to a R100m price range in Atlantic seaboard suburbs such as Clifton, Fresnaye and Bantry Bay,” says Seeff.

He says the value of Cape property can also be illustrated by looking at the comparative average cost of a luxury family home of 700 to 800m2 with four bedrooms, several garages and a swimming pool. In Pretoria such a house would cost aroundR5m to R6m, and in Sandton, probably around R10m to R11m.

In Cape Town’s southern suburbs such as Constantia and Bishopscourt, he says, you would pay around R16m to R20m. In the Atlantic seaboard suburbs such as Clifton, Fresnaye and Bantry Bay however, you could expect to pay from R20m to around R100m.

“Looking ahead to the rest of the year, we expect the Cape property market to remain active. Although sales may well be slowing in some areas, we believe this is in large part attributable to a lack of stock rather than a significant slowdown in demand.

“Our branches continue reporting plenty of buyer interest and strong attendance at the weekly show houses. And, with fewer houses on the market, these are now selling much faster and for better prices.

“Although FNB points to a market average of around 9.1 weeks for the metro, well-priced properties priced under R1.5m price are moving much faster than this. Propstats data for example points to almost half of all recent sales below this price as selling within a week of listing and for within 5 percent of the listed price.”

Capetonians are also buying second homes again, says Seeff. Many of the coastal areas – notably villages such as Langebaan on the West Coast, Pringle Bay, Hermanus and even as far as Witsand on the southern coast are all reporting increased sales to Cape buyers.

“Aside from locals trading up and down and the steady influx from other provinces, especially Gauteng driving higher demand for homes in the city, it remains a hot spot for foreign holiday home buyers. Since the start of last summer, sales to foreign buyers were up to about R1.4b across the metro.”

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