In this interesting article from Property 24 Market news, we look at the status of Cape Town’s property market.
If you require any assistance with residential rental in and around Cape Town please call our Senior Rental Agent Cindi Smith on 071 603 1192 or email her on firstname.lastname@example.org
“Most of the Cape’s residential property market is seasonal with sales records over the years reflecting that the cold, wet months from May to August are the quieter months with less activity, with an absence of upcountry and international buyers,” says Basil Moraitis, Pam Golding Properties regional head in the Western Cape:
“This year, however, Covid-19 has changed this seasonality and post the hard lockdown we achieved significant, above-average sales as a result of pent-up demand through last year’s winter months - a trend which seems set to continue in 2021. At present, the buoyant activity levels augur well for the remaining winter months. In fact, if this trend continues for a few more months, we will find ourselves back in a seller’s market as we appear to be rapidly reaching a tipping point.
“Coupled with this, it’s notable that international buyers have been more prevalent during the past year than at any time during the past five years, often committing to a purchase sight unseen, especially at the very top-end of the market.”
To illustrate the high demand for homes in the Cape Town metro, Moraitis says in May 2021 alone Pam Golding Properties’ sales of existing homes - that is excluding sales in new developments, were R383 million, compared to R190 million during May 2018 and R196 million in May 2019, representing increases of 102% and 95% respectively. Due to the hard lockdown no sales transactions could be finalised in May 2020.
“For the period March to May 2021 our sales (again excluding sales in new residential developments) were R1.138 billion, which was 208% over the same period in 2020 due to the lockdown, 55% ahead of normal trading in 2019, and 44% ahead of 2018, which was generally accepted to have been the peak of the market in the Cape region before the price correction which preceded Covid-19, says Moraitis.
“The luxury market is also assertively on the move again, with high-end homes in demand as a result of the price correction over the last three years. Sought-after Clifton has enjoyed significant sales across the entire marketplace – not having experienced such activity at this time of year over the past two decades. Our recent sales in the luxury sector of the market include an apartment in Clifton which sold for R55 million to a local buyer, a home in Constantia which was sold for in excess of €2 million (R34 million at current exchange rate) to an international buyer, and a V&A Marina apartment on the Yacht Basin which was purchased for R24.5 million by an international buyer sight unseen.
Cape Town has currently *2 017 new property listings, according to Property24 Tends Data, with the average asking price for the area being R2.99 million. The average sale price per erf for 2020 was about R1.66 million, while Section Scheme Units average sale price for the same period is R1.38 million.
The latest residential listings on Property24 show that two0bedroom homes are most widely available, at an average list price of R2.7 million. Sellers in the area fall within the 36-49 years (30%), while 36% of buyers fall within 18-35 years - followed by 35% within 36-49- years age group.
“Furthermore, semigraton from Gauteng has again emerged as a very important source of buyers who are eyeing the Cape lifestyle and natural scenic attractions. There is also movement within the Cape, with locals upsizing, upgrading or downsizing as the case may be, translating into a very healthy and active property market. Also positively, driven by the compelling value offering, the investor market is starting to return, albeit at a somewhat slower pace than the resident buyer.
“These sales reflect overall confidence in the property market and underscores the fact that the asset value of homeownership has enjoyed a strong revival after the hard lockdown. However, May sales seem to go further to indicate an inflection point where buyers are now actively seeking to finalise their purchases and secure the homes which they have had on their radar for a while. This process is not unique to South Africa, but seems to be playing out in many other property markets globally.
Moraitis explains that many reasons are contributing to the surge in sales last month (May 2021), with properties across the entire price range in demand, from approximately R1 million right up to R60 million, depending on location. “Apart from the build-up in demand created by the enforced lockdown, there has been a re-evaluation of lifestyles and realisation that home is more than just a place where you sleep at night, as well as a reprioritising of values that are important in a post-Covid world - such as the sanctuary and many varied roles which a home provides for the entire family.
“This buoyant trend of sales considerably above the peak of the market in 2018 is evident across all our offices in the Cape Town metro, from the South Peninsula right up to Langebaan and everywhere in between. Each area has appeal for specific buyers – those looking for more space and land are looking further away from the central city to favour the smaller towns, while those considering lifestyle properties are drawn to coastal areas like the Atlantic Seaboard or Southern Suburbs.
“Those who were sequestered in a small home without much outdoor space are now looking to relocate to homes which enable more outdoor living, and those who found themselves secluded on their own far from the city are looking to move closer so that they can enjoy city life as and when restrictions are lifted.
“Another very important reason for the increased demand is that the Cape experienced many years of double-digit price inflation from about 2012 to 2018 when a correction set in. Covid itself placed further pressure on house prices which resulted in a major correction – by up to 30% in some parts of the Cape. The prime interest rate at a multi-generational low point has created significant access to well-priced credit, which has also stimulated buyers to act now, and ultimately, all these factors have now combined to provided purchasers with sound buying opportunities.”
Offering advice Moraitis says the best time to sell a property in Cape Town is from September to around the end of April, which usually coincides with Easter. The reasons for this are twofold – improved weather which tends to best showcase properties with exceptional views and outlooks, and the increased number of visitors from around the country and internationally.
“Although the third Covid-19 wave does not seem to have dampened demand for property, it is evident that the market is not following traditional trends and seasonality, which means that now more than ever an experienced agent is essential to correctly price property in line with demand in that particular market segment.”