Property demand in Franschhoek and Stellenbosch now at an all-time high

Asked recently to comment on “Where property in Stellenbosch and Franschhoek now stand and where it is likely to go”, Johan Hugo, the Rawson Property Group’s franchisee for these areas made several preliminary points.

3 Bedroom House for sale in Welgevonden Estate, Stellenbosch

“In the first place,” he said, “anyone contemplating buying here has to appreciate that this has been one of the most stable property price areas in South Africa.  Stellenbosch was one of the very few towns where there was almost no price dip in the 2009-2011 downturn.  All that happened was that the steady price increases of recent years stabilised for a time.  Now, however, they are once again increasing at 3% to 7% per annum and higher levels of price growth appear likely.”

In Franschhoek, said Hugo, there had been a noticeable dip in values during the recession, but, since 2011 prices here have been rising “very satisfactorily” at a rate of close on 10% per annum in certain segments of the market.

Today, he said, Franschhoek is seeing a return of second home buyers who for several years have simply not “been around” in the property market.  It is interesting to note, said Hugo, that whereas previously a significant percentage of these were from overseas, a large majority today are South Africans, many of whom now work from their homes and commute from here to the rest of South Africa.  The very obvious exception to foreign buying dearth, he said, has been Sir Richard Branson, who recently bought a Franschhoek wine estate.  This move, Hugo speculated, could be the catalyst bringing in other international buyers.

The next point, said Hugo, which has to be appreciated, especially by people hoping to buy property in Franschhoek, is that home owners here and in Stellenbosch tend to hold onto their properties for far longer than is usual in South Africa, often from one generation to another.

4 Bedroom House for sale in Franschhoek

“As a result,” said Hugo, “we have to battle very hard to find stock and much of which that does become available is either of a lower quality or priced above realistic market levels.  The simple truth is that, in precincts like these, the owners of high quality properties are very reluctant to sell.  We do, of course, have some excellent homes for sale, but in view of the demand we definitely need more.”

So far this year, said Hugo, sales in both Stellenbosch and Franschhoek have been on a par with last year, but not as high as he had anticipated or hoped.  This, he said, was probably the result of the disappointing low growth of the economy and the generally negative view regarding economic recovery.  However the elections and on-going strikes in the mining sector also, he believes, held up sales quite noticeably.

“A great many people appeared to put their decisions on hold until the elections were over,” said Hugo. “Now that that has been achieved, I do expect the next 12 to 18 months to see a marked revival in sales activity throughout our area.”

What has become clear in recent weeks, said Hugo, is that the demand for Stellenbosch and Franschhoek homes is now at an all-time high. Properties priced at a market-related figure will be snapped up very quickly – and the towns can cater for a very wide variety of income groups.

“Taking Stellenbosch and Franschhoek together, we can offer buyers anything from a sectional title apartment at R800,000 to a R60 million wine estate. Nevertheless the big demand from investors, as before, is in the R1 million to R3 million bracket, where stock is always especially short, while people transferring to this area are generally looking for homes priced at R2 million to R4,5 million.”

“Faced with stock shortages and with seller reluctance, these are by no means easy areas to serve, but, as I have tried to indicate,” he said, “it is certainly one of the most positive and stable areas for any property investor to put his money into.”

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