Positive sentiment not misplaced in Cape Metro Market

In the face of ongoing negative market commentary about the over-valuation of properties and slow pace of sales, it’s easy to lose sight of the fact that there has been an upturn in buyer interest and sales activity over the past year.  

So says Laurie Wener, Pam Golding Properties’ MD for the Western Cape metro region, who says she is quietly positive about the year ahead for sales in her region.  

“We saw a definite increase in activity levels during 2011,” says Wener, “and are cautiously optimistic that this upward trend will continue through 2012.  It will no doubt be another challenging year due to the prevailing economic climate, both locally and globally, but we certainly do not share the dire sentiments being publicised by some market commentators.”

Supporting Wener’s positive sentiment are PGP’s own sales statistics for the Western Cape metro region, for the six months ending January 2012.  When compared to figures for the same period a year earlier, these indicate an increase of 20 percent in sales of residential properties over R12 million.  In the price range from R6 million to R12 million, there was an increase of 6.5 percent year on year.  “Most notably, the former bracket was dominated by cash sales,” says Wener, “which accounted for more than 95 percent of the deals concluded.”

Wener says her region has seen a substantial increase in demand for apartments and houses priced between R1 million and R3 million.  However access to mortgage finance remains a major stumbling block for buyers in this price range in most areas, and is affecting the number of sales concluded.  

“In fact, it is our view that the limitations of growth in the property market have far less to do with poor sentiment than they do with this lack of access to finance,” she says.  “This is borne out by the fact that we are still seeing a high percentage of cash sales across the board, and also by the modest buoyancy of the market in the less mortgage-dependent segments.  At entry level, where buyers are typically highly mortgage-dependent, at least 50 percent of concluded sales where the buyer and seller have reached agreement, end up being cancelled due to mortgages being declined.  The worst affected are first-time buyers and the self-employed,” she says.  

“Whilst we understand that banks do need to be prudent and cautious,” she continues, “the current conservatism is hampering the very entrepreneurs who hold the potential to create growth and employment in the South African economy. People starting up their own businesses, for example, generally tend to have a high work ethic, good skills and are self-motivated – however the current environment, rather than encouraging and supporting their endeavours with a long-term view on job creation, is ending up restricting growth opportunities.  Likewise enthusiastic young professionals, the up-and-coming executives of tomorrow, are being prevented from demonstrating their confidence in the local market, as their aspirations towards home-ownership are denied.”

There is still enormous confidence in property ownership as the cornerstone of our society and a sound long term investment, Wener adds.  

“The current low interest rate climate should be boosting growth in the local property market – yet the benefit of this environment is being severely limited by the current lending criteria. Banks may have relaxed their lending criteria to some degree, but this is not necessarily translating into sales offers being converted into sales.”

Looking ahead into 2012, Wener identifies several areas within the Western Cape metro region where high levels of sales activity are expected.  

These include the enduringly popular Southern Suburbs, where excellent schools ensure perennial interest from family buyers, as well as the Atlantic Seaboard, whose prime coastal lifestyle ensures sustained demand.  

Wener also identifies the City Bowl as a potential growth area, saying there is very little stock available at present to meet the high levels of demand in this area.  

“Conversely, the Western Seaboard and West Coast have a wide variety of extremely competitively-priced properties on offer at present,” she says, “and with amenities such as private schools, private hospitals, the MyCiti bus service and major shopping malls now on offer in these areas, they are definitely a node for potential growth.”

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