Affordability, choice and a record low interest rate are spurring the Southern Suburbs market

Whilst Covid-19 has created much economic uncertainty and turmoil, it’s also created the perfect storm for serious buyers who are taking advantage of the record low interest rate and robust buyer’s market to scoop up excellent deals, especially in sought-after markets like Cape Town’s Southern Suburbs.

This is especially being seen in the low-to mid-level sectors where agents are reporting encouraging movement in certain areas.

Glynis Kareklas, Area Specialist in Plumstead for Lew Geffen Sotheby’s International Realty, says that Plumstead has been a hive of activity since the end of hard lockdown.

“The lowered interest rate has opened up an opportunity for buyers who could not afford to buy in the area before, and we are fielding loads of enquiries from purchasers looking for bargains, with some chancing their luck by putting in very low offers.

“However, not all sellers are desperate and many are holding their ground, unwilling to accept lower offers. I recently sold a six-bedroom double storey house in Plumstead for the full asking price of R3.2 million, even though the purchaser started off with a low offer.

“That said, with the reduced interest rate, even at full asking price buyers are getting value and I have noticed that many of the new properties coming on to the market now are being more conservatively priced.”

According to Marc Plastow, the group’s Area Specialist in Harfield Village, Lower Claremont and Kenilworth, there is also considerable interest in well-priced freehold properties in these areas where entry level buyers are snapping up good deals.

“There are very few freehold properties under the R2m mark available so when they do come onto the market, they tend to sell very quickly.

“At the beginning of June, I listed a house for R1.895m and received eight enquiries on the very first day – and received an offer to purchase that same day.”

He adds that the opposite is true in the sectional title sector as buyers are spoilt for choice and can therefore afford to be very picky so sellers are being forced to adjust their price expectations in many instances.

Sectional Title Specialist, Dave Burger, says that during lockdown he has received 30% more enquiries for flats in Mowbray and Rosebank than in Rondebosch or Newlands.  In both areas one can buy a beautifully renovated one-bedroomed apartment for under R1m.

“Since the start of Level 4 restrictions, I’ve actually had an increase in buyer enquiries, especially from first-time buyers and investor purchasers as we should see a spike in rental demand as soon as the universities open again.”

Burger says that sellers have been showing more willingness to negotiate this year, however he has continued to achieve 90%-95% of asking price on properties that were already correctly priced pre-Covid-19.

“I believe the effect of the pandemic on pricing will definitely highlight the motivated sellers from the rest."

Barbara Andrews, fellow Sectional Title Specialist in Plumstead, Wynberg and Tokai says that she has been very surprised at the buyer interest there has been in the area in recent months.

“In the first month of lockdown I sold two properties in Wynberg; a one-bedroom flat in Upper Wynberg for R950 000 and a three-bedroom flat in Lower Wynberg for R1 450 000.”

Dawn Bloch, Area Specialist for Lakeside, Kirstenhof and Zwaanswyk, says “Sellers need to be very cognisant of the fact that buyers are looking for value first and foremost and they will have to be very realistic with their pricing in order to gain the edge over all the competition.”

She adds that since 1 June when Level 3 allowed estate agencies to operate more freely, she and her partner, Lee-Ann Davis, have been extremely busy.

“As no showhouses are allowed, we have had to sometimes process up to 10 viewings a day which clearly demonstrates a pent-up demand for property after the hard lockdown.

“The suburbs where we have seen the most activity are Lakeside and Kirstenhof in the under R3m price band.”

She says that young, often first-time buyers are currently looking at three-bedroomed freestanding homes and that many are viewing higher priced properties than they would not normally look at in the hope that sellers will accept high discounts.

“Some buyers have managed to score excellent deals but generally, this is not happening as sellers are still trying to achieve their highest price, particularly as many are emigrating and require the funds to re-establish themselves overseas.

“We recently sold two Lakeside properties for R2.575m and R2.598m and a further sale was concluded, but the seller then decided not to emigrate to Canada, amid the uncertainties of COVID19.”

In conclusion, Burger offers buyers a word of caution: “It’s almost more important for buyers to be fully pre-qualified now than prior to Covid because, whilst the interest rate is the lowest they have ever been, the banks are still assessing mortgage bond clients’ affordability based on higher rates.

“It is very likely that the rates will start rising again within a year, albeit in small incremental increases and affordability and good credit scores will always remain the name of the game for clients looking to access bond finance at favourable lending rates.”

Loading comments
More Market & Opinion articles
Market & Opinion
Buyers urged to be realistic with offers as property market rebounds
07 Aug 2020
While the market has picked up significantly and Seeff ended July with the highest sales in six years, buyers putting in low offers are left disappointed, says Samuel Seeff, chairman of the Seeff Property Group.
read more
Market & Opinion
What is a reasonable offer below the asking price of a property?
06 Aug 2020
Looking to take advantage of the favourable property buying conditions and put in an offer to purchase, but not sure what would be a reasonable offer below asking price?
read more