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Cape property more popular than ever - Seeff

Jul 22 2015 05:00

Cape Town - The Cape metro has once again come out tops in the country for house price growth with an average appreciation rate of 7.8% as at the second quarter of this year.

It also ranks tops for confidence and market strength according to the latest FNB Property Barometer.

Chair of the Seeff property group, Samuel Seeff said on Tuesday there can be little doubt that the Cape and its property are more popular than ever.

"Aside from local buyers trading up and down, FNB again confirmed that the Cape continues to see high levels of migration from other provinces including the country’s biggest economy, Gauteng," said Seeff.

With that, said Seeff, comes a rise in the demand for homes to buy and rent.

Lightstone data shows that some R18.5bn in real estate transactions has already been recorded for the metro over the last year and, Seeff says that most agents now cite a lack of stock rather than buyers as the biggest challenge bearing down on the market.

Aside from a shortage of properties to sell in many areas, rental agents are also pointing to shortages to meet the demand for rental accommodation, not only at the bottom end of the market, but also in the top end suburbs.

New developments such as the V&A Waterfront and CBD that could not find buyers five years ago, have now just about sold out and you will be hard pressed to find anything on the market for under R5 million at the Waterfront.

Almost across the board, property values in the various suburbs of the city are up notably. In some hot spot areas, price growth has significantly outpaced the average cited by FNB, says Seeff.

On the Atlantic Seaboard for example, the average sales price for the first half of this year, based on Propstats data is around R7.3m, over a million more than last year’s around R6.1m.

That Cape Town is the best run metro in the country is a big draw-card for investment, property included, said Seeff.

"People are not only voting with the feet when it comes to the Cape, but are prepared to pay significantly more for property here compared to for example Sandton, the financial and wealth hub of the continent and especially Pretoria, the country’s de facto capital and governmental seat," he added.

In Sandton, only a handful of residential property transactions are concluded above the R15m price mark. In Pretoria, almost nothing sells above the R10m price mark.

"In Cape Town, however, a R20m sale now hardly lifts an eyebrow. Since the start of last year for example, about 82 sales above R20m to the total value of almost R2.5bn have been concluded in the Cape metro," said Seeff.

Seeff alone has, for example, concluded a number of sales in the R40m to a R100m range in the Atlantic Seaboard suburbs such as Clifton, Fresnaye and Bantry Bay.

He illustrated the value of Cape property by looking at the comparative average cost of a luxury family home of 700m² to 800m² with four bedrooms, multiple garages and a swimming pool. In Pretoria you will pay around R5m to R6m, in Sandton, probably around R10m to R11m.

In Cape Town’s top end areas of the southern suburbs such as Constantia and Bishopscourt, you would pay around R16m to R20m. On the Atlantic Seaboard suburbs such as Clifton, Fresnaye and Bantry Bay however, you will be looking at upwards of R20m to R30m to around R100m.

Looking ahead to the remainder of the year, Seeff expects the Cape property market to remain active. While sales volumes may well be slowing in some areas, Seeff said that this is in large part attributable to a lack of stock rather than a significant slowdown in demand.

"Our branches continue reporting plenty of buyer interest and strong attendance at the weekly show houses. And, with fewer houses on the market, these are now selling much faster and for better prices," said Seeff.

While FNB points to a market average of around 9.1 weeks for the metro, well-priced properties under the R1.5m price mark are moving much faster than this. Propstats data, for example, points to  almost half of all recent sales below this price mark as selling within a week of listing and for within 5% of the asking price.

Second homes

Capetonians are also buying second homes again, said Seeff.

"Many of our coastal areas, most notably villages such as Langebaan on the West Coast, Pringle Bay, Hermanus and even as far as Witsand on the southern coast are all reporting increased home sales to Cape buyers," he explained.

Aside from locals trading up and down and the steady influx from other provinces, especially Gauteng driving higher demand for homes in the city, it remains a hot spot for foreign holiday home buyers.

Since the start of last summer, Seeff has, for example, seen sales to foreign buyers of about R1.4bn across the metro.

seeff properties  |  samuel seeff  |  property
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