British interest treading water in Cape property

Andre De Villiers
Interest from European buyers, or more specifically British purchasers – in the Western Cape property market is expected to tread water for the next year or two.

Bubble prospects in the British property market; the surge in South African property values; a slightly higher UK interest rate and a stronger and more stable rand are all advanced by prominent real estate principal agent Andre de Villiers as reasons for the current muting of British interest.

De Villiers also believes waning confidence by British investors in their own property market as a result of a dip in values is having a negative knock-on affect in their interest in the Western Cape market and this has became apparent with a definite tailing off from Internet inquiries received by his company.
“In fact all the key edges the Brits previously enjoyed over local buyers have evaporated to some extent and taken much of the gloss off ownership of local holiday homes.” The long travelling distances, while not so much an issue before, he believes could also become a negative when included with the other declining financial advantages.

Even so de Villiers, who terms the slowdown interruption as a “rain check” for the local market believes the mini hiatus is little more than temporary with the beauty of the region, the climate and still good property value for money well able to recapture the trend. But its revitalisation is dependent on the rejuvenation of British residential property. “This could come earlier than we think as that market, according to recent Nationwide figures, reflect some growth in October.”

In the meantime, slack left from the British purchasing trend appears to be more than taken up by enthusiastic expatriate South Africans – mostly living in the UK – eager for local ownership.

Rudi Botha, CEO of mortgage originator, BetterBond, reports a definite hike in processing homeloan applications for expatriate purchasing. “It’s been fairly steady throughout the year, but just lately there’s been an increase for expatriate homeloans in the R1 million to R2 million bracket with some very good quality applications, in terms of the professions of the borrowers.” Many include middle management and a stable smattering from the medical profession.

Most are from people employed on overseas contract work, but de Villiers says the numbers of people who actually emigrated some years ago are also wending their way back home with strong focus on purchasing in new developments.

“Not necessarily with the purpose of returning here immediately or even living in their newly owned properties, but certainly with the intention of ultimately returning.”

For de Villlers, whose company featured prominently in the mushrooming “packing for Perth” trend in the late nineties, the restoration of confidence in the country’s future by the more politically sensitive is particularly pleasing.

Botha says with many of them having first hand experience of problems in other countries the overall belief is one of being much better off here and keen to resume their former lifestyles. While difficult to quantify his general view is that the majority of them left the country within the past five years.

Turning to local market conditions, de Villiers, owner of the Chas Everitt International Constantiaberg franchise, reports four sales at a total value of R18 million in Upper Constantia in the past four days. Prices ranged from R2,4 million to R6,1 million and all involved South African purchasers. He attributes the success to high levels of market penetration and quality of agents servicing the upmarket suburb.
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