While homeowners should brace themselves for possible future interest rate hikes, the property market is still in far better shape than it was in 2008 when the property bubble burst and house prices plunged.
This is according to Carl Coetzee, CEO of BetterBond, who says: “Of course, the increase will mean a change in monthly repayments, and we encourage homeowners to factor this into their budget calculations. But we are still in a far better position than we were in 2008 when the property market collapsed and inflation was at 11.5%.”
By way of explanation, the monthly repayments on an R2 million bond in 2008, at the height of the property market’s implosion when the prime lending rate was at 15.5%, was just over R27 000.
Buyer activity remains strong, especially in the middle-priced segments, says Coetzee. RE/MAX reports that in real terms (inflation-adjusted rand values), sales values for 2021 grew by 60.9% compared with 2008. “I do expect that buyer activity will take a knock if there is a hike, but the demand for homes priced at fair market value should not be negatively affected following this week’s announcement. This is where pricing a home correctly becomes so much more important,” says regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
Cape Town offers homebuyers a tremendous diversity of homes across all price ranges and varying in nature from compact sectional title apartments to spacious, luxury seafront units, and from cottages and two-bedroom homes to large family homes, so an average property is not easy to define as it depends very much on buyer perception and budget and varies from suburb to suburb, says Basil Moraitis, regional head for Pam Golding in the Western Cape.
So what may be deemed an average home by one person may be perceived in a different light by another.
“In an email distributed by Ooba recently, the average selling price in the Western Cape is R1 851 740. This is purely based on value divided by a number of sales to obtain an average and does not signify the availability of housing at this price across various suburbs but provides a yardstick to measure regional pricing and trends,” explains Moraitis.
Buyers are spoiled for choice in Atlantic Seaboard
“The Atlantic Seaboard is probably one of the most appealing areas for property investors - particularly Clifton and the V&A Waterfront - which offers easy access to Cape Town CBD as well as world-class beaches and landmark Table Mountain. Luxury shopping, coupled with world-renowned educational institutions and first-world medical facilities, all within a short commute, make Cape Town and the Western Cape, in general, an appealing investment destination,” says Moraitis.
In addition to this, Ross Levin, licensee for Seeff Atlantic Seaboard and City Bowl says the seaside suburb of Sea Point offers predominantly apartments but also many houses, often older, but increasingly these are renovated and upgraded.
He says older apartments are also increasingly being upgraded. The suburb has seen good price growth over the last five-plus years driven by high demand as the suburb is seen as more accessibly priced for those looking to capitalise on the sought-after Atlantic Seaboard lifestyle.
The Sea Point Promenade is world-famous these days as are the spectacular mountain and sea views that can be enjoyed from the suburbs. The apartment blocks on Beach Road are sought-after and can fetch good prices these days.
Why invest?
High demand for property for sale and rent in the suburb has catapulted Sea Point to the suburb with the highest sales volumes on the Atlantic Seaboard. Since the onset of the Covid-pandemic for example (i.e. April 2020 to date), well over 500 properties have sold in the suburb to the combined value of almost R2 billion, says Moraitis.
Demand for apartments is set to increase as tourism and other events in the City recover back to pre-pandemic levels making the area a hot investment for buy-to-live as well as investment purposes.
Buyers can expect to pay upwards of R2 million for an apartment although there are still the odd small units at around R1.5 million, these are quite rare. Prime apartments on Beach Road can sell for upwards of R3.5 million to over R5 million with top-end apartments easily reaching upwards of R10 million. While there are still some older houses selling below R5 million, expect to generally pay upwards of R5 million to around R17.8 million for a top-end home.
'High demand for rentals in Sea Point'
Sea Point is in high demand for rentals, says Ross hence offering excellent investment potential, especially now that tourism is set to return and with the Cape Town Stadium being the new base for Western Province Rugby along with an expected resurgence in CTICC and other events. Apartments are extremely popular rentals. Monthly rates range upwards of around R8 000/month on average for a basic apartment with luxury new builds and renovations upwards of around R30 000 to R60 000/month.
Atlantic Seaboard has currently *252 new property listings, according to Property24 Trends Data, with the average asking price being R5.695 million vs the average selling price R3.375 million.
The average sale price per erf for 2021 was about R9 million, while Section Scheme Units average sale price for the same period is R2.9 million.
The latest residential listings on Property24 show that two-bedroom homes are most widely available, at an average list price of R4 674 500.
71.3% of the sellers are older than 49 years old, while 49.5% of buyers are younger than 49 years old.
Click here to see all the sale and listing price trends in Atlantic Seaboard
Luxury market
“During the following two years, we saw a significant increase in demand for luxury property as buyers reconsidered their priorities following the pandemic and actively looked for sought-after lifestyle properties. This has resulted in a reduction of properties for sale in this segment, which is actively driving pricing expectations and resulting in competitive offers by buyers at the top-end,” says Moraitis.
“Notably, this is the first time I’ve seen this in the Clifton market.”
“An excellent example of this trend is the Camps Bay market which had a median selling price of R10 million for full title property in 2020. This increased to R12.2 million in 2021 and to R15.2 million for the first four months of this year.”
Moraitis says the buoyant trend in the luxury market is evident across all top-end suburbs throughout the Cape Metro from the Atlantic Seaboard extending into the Southern Suburbs and the South Peninsula.
“In Clifton, such is the demand and lack of supply that we recently saw three top-end homes sell literally within days of listing. Two of the sales had to compete for offers, while a Fourth Beach property was sold on the day of listing to a local buyer for R22.5 million.”
He says there are definitely more transactions being concluded and more buyers in the market, especially those from international destinations who are again interested in South African real estate, particularly German buyers who are now more prevalent than at any time during the previous seven years, while many local buyers are purchasing to upgrade.
“The most sought-after locations are on the Atlantic Seaboard, especially Clifton, Camps Bay, Bantry Bay, Mouille Point, and the V&A Waterfront, as well as Constantia and Bishopscourt in the Southern Suburbs and Simonstown on the South Peninsula - where we recently achieved a record sale for the area of R19 million to a UK-based buyer. The previous highest price in Simonstown was R14 million. High-end residential sales in Constantia include transactions for R19 million, R19.995 million, R20 million, and R26.5 million – all to South African buyers.”
Other notable sales by Pam Golding Properties in these areas include in Clifton: an entire block on the seaside of the road with beach access in Clifton purchased by a local buyer for R80 million, and residences sold for R37 million to a buyer from Jersey (the largest of the Channel Islands), and two Fourth Beach homes sold for R24.5 million and R24 million respectively to local buyers.
In Mouille Point, a penthouse apartment in renowned Waterclub was sold for R39 million to a buyer from Finland and an apartment was sold for R30.4 million by Pam Golding Properties to a local buyer, while in Camps Bay, where there is a high incidence of international buyers, residential properties sold included R26 million for a property purchased by a Swedish client and R24 million and R23 million acquisitions made by German buyers.
“Lifestyle is the key consideration for these high-end buyers of luxury property. Securing a unique property, be it an apartment on the beach, penthouse or exceptional view property, is the main consideration, and in many instances, Covid accelerated buyers’ long-term plans. There is no doubt that South Africa offers outstanding value, with comparable properties in other sought-after destinations often priced at multiples of what you pay here. The increasing international demand underscores this trend,” adds Moraitis.
“The prospects for the Atlantic Seaboard luxury market for the rest of the year are positive. We also believe that activity and demand in top-end security estates in the Western Cape will continue. For example, there are numerous development sales in areas like Constantia which offer families a great lifestyle.”
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*Property24 Listings Data Disclaimer: The trends detailed in this article are based on Property24 listings, current at the time of publishing, and property transfer data supplied by Deeds offices, which typically take 3-4 months to reflect. Suburbs are listed according to Property24's geographical database. In some areas this will include both commercial and residential properties. The age demographic data of buyers, sellers and stable owners is determined over a six-month period. These Property Values should not be used as a substitute for independent professional advice and is subject to Property24.com Terms and Conditions.
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