There are clear signs that an upturn is likely to be seen in the Cape Town residential property market over the next 12 months.
This is according to Rowan Alexander, Director of the estate agency Alexander Swart Property, who says that the first evidence is the big improvement in the morale and sentiments of the agents in recent weeks - not only those in his company, but also elsewhere.
This, Alexander believes is always an accurate indicator of what is yet to come and he is witnessing it “across the board”.
Such revivals are usually complemented by upturns in other businesses, especially those with cash sales. One example is the motor accessories trade (as revealed by a close contact) where there are already signs of a significant increase in sales. Another example is the small builder and renovation/upgrade enterprises throughout Cape Town who are now experiencing a regular supply of work.
“I do realise that many major contractors are still having great difficulties, which is not the case with smaller firms, those handling only one or two jobs at a time. They are more buoyant now than they have been for a long while,” says Alexander.
He says another very telling indication is the rental market. Properties which were difficult to rent out a year ago are now beginning to attract tenants. A three bedroom home in Sonkring, for which rental agents struggled to get the usual annual rent increase, has now been re-let at a more satisfactory higher price.
“In the third quarter of this year Alexander Swart’s sales have been an amazing 50% up on the sales for the first two quarters and there are indications that this will continue,” he notes. “What is more, the average time taken to sell a home has dropped from 42 to 28 days (a really significant pointer to the future probable scenario) and almost all accepted offers have been within 96% of the sale prices.”
Alexander says this was expected and the FNB property barometer had shown that because many sellers took their homes off the market, stock would be reduced, which has happened. “This has begun to stabilise the market and made buyers realise that they cannot prolong a decision, but we have been agreeably surprised at the extent of the recovery.
“Of course, we benefit from the fact that 90% of our stock is priced at under R3 million - in our territory the big demand is focused here - but there can now be very little doubt that the first green shoots of a recovery are to be seen.”
He adds that his summary of the Cape Town Northern Suburbs conditions has been backed by recent statistics from the City of Cape Town deeds office and Lightstone analysts.
These reveal that the average sales figure of freestanding homes in the first three quarters of this year was 1 298 per quarter, but in the last quarter (July, August and September) the figure rose to 1 497, an increase of 15%.
Similarly, in the sectional title market, in the first three quarters of this year the average quarterly sales were 891 but in the third quarter they were 1 132, an increase of 27%.
Looking at the entire market, all categories of housing and land sales, the quarterly average for the first three quarters was 2 326, but in the last quarter it was 2 769, a 19% increase, he says.
"Previously, the demand for homes was to a large extent driven by middle-aged people and they are still the dominant force in the market, he says. Lately, young adults, under the age of 35 comprise one out of every three buyers." This is very good for the housing sector because younger buyers tend to climb the property ladder and in coming years will boost upper bracket sales, he says.
“It often happens, when anyone takes a positive upbeat view of the prospects for the property market, he is likely to be accused of trying to ‘talk up’ the market,” says Alexander. “I trust and have mentioned sufficient evidence to support a more favourable outlook.”
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