After almost a decade of steady and consistent growth which drove the Helderberg Basin's transformation from a sleepy seaside village collective in the Western Cape to one of the country’s most sought-after residential nodes with record sales in 2015 and 2016, the housing market has become increasingly strained over the last 18 months.
This is according to Chris Cilliers, CEO and Principal for Lew Geffen Sotheby’s International Realty in the Winelands, who says there was a perceptible downward shift after Pravin Gordan’s dismissal, and the market has since struggled to recover under the relentless economic and political pressures.
”Gordon’s Bay’s median house price hit a new high in 2015 when it rose to R1.37 million with a record number of 62 registrations and in 2016 when it jumped to R1.97 million, even though there were fewer sales. But in 2017 the median house price dipped to R1.7 million, declining even further this year to R1.5 million at the end of the second quarter,” he says.
“During the same period, Somerset West’s slightly more resilient market maintained its momentum well into 2017 with record median prices set in 2015 at R2.1 million, in 2016 at R2.45 million, and again in 2017 at R2.6 million, but it has hovered around the same price this year. Sales volumes, however, have steadily declined since 2015.”
Cilliers adds that not all areas fared equally, with a notable exception being Strand Central, which has continued to experience steady price growth since 2014, increasing again this year by almost 7% from R1.95 million in 2017 to R2.085 million by June this year. And while sales volumes have fluctuated slightly, they have remained consistent.
“The market started to really pick up in 2012 when investors began to sit up and notice the Helderberg’s compelling drawcards,” says Cillers, “not least that it offers exceptional value in an increasingly high-value marketplace where prices of comparable properties in Cape Town have skyrocketed,” he says.
“And, at a time when the emergent trend was to move away from the city in pursuit of a more tranquil lifestyle, the Helderberg’s scenic beauty, convenient location and close proximity to myriad leisure and sports activities had become very appealing factors.”
Somerset West, the crown in this scenic jewel, grew exponentially during this period, becoming a thriving economic hub with many blue-chip companies opening offices and branches in the new commercial and retail centres and office blocks.
“In addition to Somerset Mall which has expanded to include smaller satellite malls, shopping centres and offices are popping up to service the newer outlying areas of the town, and the new residential developments along the N2 also include commercial and industrial components,” says Cilliers.
He says there has been far less new development in Gordon’s Bay and Strand, but, because of their idyllic oceanfront location, holiday atmosphere and accessible pricing, they have become known as two of the best entry-level markets in the Western Cape, if not the country.
“And in leaner times like these, such markets offer astute investors even greater investment opportunities, especially if they are looking to buy property for their future retirement or for downsizing once the children have left the nest,” explains Cilliers.
However, while the residential sale, rental and development markets have perceptibly slowed across the board, commercial properties are in high demand.
He says the retail sector, especially, is very buoyant and demand for retail space and shops in retail centres is conversely high.
“The tough market conditions are unlikely to improve significantly until the political instability abates and the economy improves, especially as these negative factors also temper foreign investor appetite for emerging markets worldwide,” says Cilliers.
“However, there is still demand for property in sought-after areas, especially in the entry and middle markets, but pricing is critical, and serious sellers will have to price their homes according to market expectations. This is not a market that is hungry for risk.”
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