The Western Cape has been on the radar for property investors for a few years now. Following a period of over-escalated house price growth, the province has since experienced more subdued price escalations. According to Standard Bank, Western Cape HPI grew 2.4% y/y in 2Q19, from 1.5% y/y in 1Q19. This is well below the national average of 4.1% y/y in 2Q19.
“Right now is the perfect time for long-term investors to buy within the Western Cape, as house price growth is lower than the national average which provides investors with an opportunity to get into the market low and wait to sell when it reaches another high,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
As popular as the Atlantic Seaboard may be, Goslett reminds buyers that it is not the only hotspot for investors.
“There are several other suburbs that lie outside of Cape Town that offer more affordable investment opportunities for those who are looking to enter the Western Cape property market. The small town of Riebeek Kasteel is one of them. According to Lightstone Property data, the median asking price of a freehold property is sitting at R1.95 million for 2019, which reflects some sturdy growth for the year thus far compared to the R1.5 million that reflected in 2018,” says Goslett.
According to Anne Ketel, Broker/Owner of RE/MAX Valley Properties, sales in this area have recovered well after a sluggish few months prior to the elections.
“At the moment, it is still a buyer’s market, but I feel this will change in the near future,” says Ketel. “There is a definite trend to rent before buying in this area, which attracts investors towards the entry-level properties that offer potential rental returns. We have already noticed that the lower (below R2 million) and upper ends (R3 million+) of the market are moving quicker than properties in the mid-range price bracket.” Typically, properties priced between R2 million to R3 million are family-sized homes, which explains why this segment of the market would be quieter within this area.
“There are not many younger buyers as there is a lack of high schools in the immediate area, though there are a few primary schools scattered around town. Most of our buyers are of middle-aged or what is referred to as a ‘mature’ profile, with plenty of pensioners settling here to live out their retirement,” says Ketel.
Goslett says younger buyers could consider buying property here and renting it out until they are ready to retire. “When they reach retirement age, they can then either move into a home that has been paid off, or sell the property and pocket a substantial profit.”
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