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Buyers choose cash in many upmarket suburbs

In a number of upmarket suburbs in Cape Town, there are substantially more cash buyers than buyers using bonds to purchase properties. 

“We believe this shows a growing preference by buyers to invest their money in tangible assets as opposed to the stock market and other intangible assets,” says Francois Venter, Director of Jawitz Properties.

It is no secret that the South African stock market is widely considered overheated, which means the level of risk in the stock market is increasing.  This is prompting many investors to consider less volatile, more tangible assets where they feel safer.  

“The fact that buyers in more expensive suburbs are choosing to use cash shows that they are viewing property as a good investment over the medium to long term,” Venter says.

Figures from Propstats for the first six months of 2015 show that of 365 properties that changed hands on the Atlantic Seaboard, for example, 270 or 73% of these were cash sales.  This trend could be seen throughout the area, from very expensive suburbs like Camps Bay, Bantry Bay, Clifton and Fresnaye, through to areas like Green Point and Mouille Point. 

In Sea Point, out of 117 properties sold, 95 were cash sales versus 22 sales where bonds were used.  “Sea Point is known as a suburb with a strong, sustainable rental market.  The high level of cash buyers tells us that property is becoming a preferred asset class for investors.”

This trend was also visible in a number of upmarket areas in the Southern Suburbs.  These include both Constantia and Newlands where approximately 60% of total sales in each of these areas were cash.   In Plumstead, on the other hand, where buyers are likely to have less financial manoeuvrability, just over 60% of sales were through bonds.

In the City Bowl, the ratio between bonds and cash was more or less even with the exception of De Waterkant where 70% of sales were cash and Higgovale, where about 68% of sales were cash. 

When it comes to sectional title as opposed to free standing, bonds often dominate sectional title sales.  But even here, there were more cash buyers – of 790 sectional title properties that changed hands, 477, or 60% were cash sales and 313 were with bonds. 

“As the year continues, we wouldn’t be at all surprised to see this trend continue,” Venter concludes.


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