Twenty six percent increase in unit sales

Pam Golding Properties’ Boland and Overberg regions have reported a 26 percent increase in residential unit sales over the past financial year.  

For the year ending February 2012, the group sold close to 750 residential properties in these areas, compared to almost 600 units in the previous year.  The total sales value achieved was over R1.3 billion – reflecting an increase of 19 percent on the previous year.

Highest demand for homes under R2 million

PGP’s MD for the Boland and Overberg regions, Annien Borg, says around 75 percent of the properties sold were priced under R2 million, indicating the key importance of affordability amid tough global economic conditions.  “It’s also perhaps a sign of pent-up demand in this price range,” she adds.  “Given the indications that banks are slowly beginning to ease their strict criteria on lending, buyers in this range who were previously struggling to access finance are now able to do so, and are committing to purchases as a result.  We believe many are also taking advantage of the current low interest rate environment, especially amid indications that inflationary pressures may result in rates rising again in the near future.”

“Buyers are aware of prevailing market conditions and believe they have a wider variety of properties to choose from than ever before,” she continues.  “The result is that they are taking their time to commit to an offer, and are strongly driven by the search for value for money.  For this reason it is more crucial than ever that sellers price their properties realistically, if they are serious about selling.”

The biggest increase in activity levels over the period under review was seen in the age group under 30, a fact which Borg sees as a very positive sign.  “The number of buyers in this age group was 73 percent up on the previous financial year,” she says, “indicating a surge in first-time home buyers entering the market in our regions.  The activity in this category was largely in the R500 000 to R1 million price range, and buyers included a number of young families buying into secure developments such as Diemersfontein “The Village’, in search of a secure yet carefree lifestyle for their children.  This category also included a number of young single professionals buying their first homes, often in the Northern Suburbs of Cape Town.  The purchase decision for these buyers is driven less by family lifestyle needs and more by convenience, proximity to places of work, and being close to facilities such as gyms, shopping centres and other amenities – they want eat, shop, work and play within close proximity of home.”

Local buyers still dominant, but some return of foreign interest

Borg says local buyers from the Western Cape accounted for the majority of sales, at around 70 percent of the total.  The second largest category was buyers from Gauteng, either relocating to the Cape, purchasing for holiday use, or in some cases, settling their families in the Boland while continuing to work in Gauteng during the week.  “The relaxed lifestyle, better security, immense natural beauty of the area, and the wealth of excellent schools from which to choose, are compelling factors for these upcountry buyers,” Borg says.

There has been renewed interest from foreign buyers in the Boland and Overberg over the past year.  Unit sales to this group increased by 44 percent compared to the previous year, with a 25.5 percent increase in total sales value.  “While there may still be public concern that foreign buyers are sweeping in and cherry-picking the very best top-end properties in the Cape, our figures certainly don’t support that theory,” says Borg.  “In fact, of the just under 50 properties sold to foreign buyers during this period, only 12 percent of the sales were valued at over R5 million.  In fact, 30 percent of the foreign purchases were priced under R1 million, and more than half were priced under R2 million.”

Borg notes that foreign purchases remain a small segment of the market at present, accounting for just 10 percent of PGP’s overall sales in the Boland and Overberg regions.  “It is clear that the credibility of our banks plays in our favour when it comes to the foreign market,” she says, “as there is definitely a sense from overseas buyers that they find more peace of mind in investing their money in property here, than in Europe.  This year, foreign purchases facilitated by PGP in these regions ranged in price from R200 000 for a plot in Swellendam, to just over R13 million for a property in the Bel-Aire security estate in Somerset West.

Notable growth in several towns

Several individual PGP offices showed above average increases in sales turnover during the year.  These included the Somerset West office, which sold over 100 properties to a total value of more than R215 million – reflecting a 63 percent increase on the previous year’s performance.  Another significant increase was noted in Hermanus, where PGP sold 34 units to a total value of over R111 million – a 54 percent increase in turnover on the previous year.

Other particularly busy areas include Welgemoed, where PGP sales were valued at close to R110 million for the year.  The PGP office in Wellington also recorded substantial turnover of more than R63 million in total sales.

Cash is still king

Cash buyers continue to dominate the market, accounting for approximately 50 percent of PGP’s sales in the Boland and Overberg regions over the course of the financial year.  But Borg says there are signs of growing leniency from banks in awarding mortgage finance.  “Banks have taken a lot of criticism of late, over some buyers’ ongoing difficulty in obtaining finance,” she says.  ‘However there are signs that they are beginning to relax their lending conditions to a degree.  Recent figures released by Ooba show that the total value of home loan applications in February 2012 was nearly 50 percent higher than it was in February 2011 – and that the value of approved home loans went up by 32 percent on the same year on year comparison.  While the figures are still well below the levels seen in the boom time of 2007, for example, the substantial increase is a positive sign.”

“Despite this sign of an easing of lending criteria,” she continues, “we would still advise all potential buyers to do their homework thoroughly and to sit down with a bond consultant before they start looking at properties.  This way they can ensure that they have a realistic sense of what they can safely spend, and will not waste their time looking at homes that are far beyond their price limit.”

Borg concludes that she anticipates continued slow but steady growth in the market in 2012.  “We are optimistic that market conditions will continue to improve over the course of the year, and that PGP’s performance in the Boland and Overberg regions will continue to reflect further renewed confidence in the property market,” she says.

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