“In 2006, at the height of the property boom, the ratio of bonded sales to cash in Fishhoek was two to one, says Arnold Maritz, owner of the local Sotheby’s International Realty franchise. This has now been reduced to a ratio very close to 1:1, while in Noordhoek there have been more properties bought with cash this year than with bonds.
“And while cash buyers are usually tough negotiators, they can of course act independently of the banks to take advantage of the excellent investment and upgrading opportunities presented by a market downswing. This is what they are doing in our areas at the moment and that is the biggest driver of the increase in sales this year.”
In addition, he says, there has been a slight increase lately in the percentage of bond applications being approved, and an easing in credit restrictions to even allow 90% bonds in some cases.
As for prices, Maritz says it helps that there has been almost no new development in this whole area for many years, and that the supply of homes for sale is thus limited.
“However, there is still some weakness in demand, and serious sellers need to understand this and adjust their expectations accordingly. Currently more than a third of sales in this area (37%) are only being achieved after sellers have dropped their original asking prices by more than 10%, while the average difference between listing prices and selling prices is still around 9%.
“There is also a significant amount of stock that has been on the market for more than a year, and many of these sellers have no urgency and seem determined to hold out for their prices for as long as it takes. This is putting a further brake on sales and ultimately on value growth.”
Meanwhile, he notes, there is a growing demand for properties to let, and with an almost stagnant supply because of the lack of development, rentals are on the rise. “And this situation is not expected to change in the short to medium term, so the return on buy-to-let properties should continue to improve over the next year or two.”