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Moving from Johannesburg to Cape Town is an expensive exercise on many fronts, including adjusting to much lower salaries, on average.
But by far the biggest adjustment is to property prices. Walking through show houses is a depressing exercise and you will have to adjust your mindset if you don’t want to feel insulted by the asking prices.
You will have to accept that, unless you are prepared to live far from town, you should expect to pay a lot more for a lot less in Cape Town.
For most people, agent’s commission for the sale of your house in Johannesburg and transfer duty on the Cape Town property will already decrease the amount of money you have to buy a home.
In addition, you will probably have to dig deep to afford rental in Cape Town while you look for a home (although agents say rental is relatively cheaper in Cape Town). If you do rent first, you will also be paying a mover twice.
Even without taking these additional costs into account, a R2m to R3m house in Johannesburg is a R4m to R10m house in Cape Town.
So before you have even started, you cannot replace your Joburg house with one of the same value.
According to Seeff Property Group, Cape year-on-year price growth is around 14% to 20% on average compared to a national average “of around 6% to 8% at best”. Over the last five years, prices in the Cape have grown at two to three times those of Johannesburg and Pretoria.According to Pam Golding Properties, the Western Cape was the destination of choice for 33% of people moving. Pam Golding Properties researcher and analyst Sandra Gordon says Cape Town remains the top-performing metro property market, with a house price inflation of 14.12% in January 2017 compared with the national average of 4.3%.
Seeff chairman Samuel Seeff says that across most areas in Cape Town up to 20% of buyers are from other provinces, mostly from Johannesburg and Pretoria.
“In fact, in the R20m+ sector, Joburg buyers make up 30% of all sales this year across the metro – Atlantic Seaboard, City Bowl and Southern Suburbs areas such as Bishopscourt and Constantia – compared to foreign buyers who comprise just 8% of sales.”
Joburg buyers accounted for only 10% of top-end sales just three years ago.
At the top end, you will pay 20% to 40% more than in the wealthy suburbs of Johannesburg, Sandton and Pretoria East, Seeff says, while middle-income buyers will pay about 20% more.
Very wealthy South Africans spend up to 40% more on Cape property compared to anywhere else in the country at this level, and there were close to 70 sales at this level in Cape Town compared with 10 in Johannesburg.
By May this year, says Seeff, there were 40 sales at over R20m in the Cape metro, 30% of which were to Johannesburg buyers.
Cape Town property in general is located on smaller pieces of land and it is not unusual to find properties with no off-street parking.
Seeff gives an indication of the price differentiation between the two cities: “While the R2.5m to R12m price band is the busiest in Sandton, comparative activity on the Atlantic Seaboard sits in the R5m to R25m range.”
In the Parkview and Parkhurst areas of Johannesburg, you can get a luxury 4- to 5-bedroomed house with a swimming pool on a 500sqm plot for around R4.5m to R6m. In the Cape Town City Bowl, a similar house will cost you around R9m to R15m.
This is more or less what you would pay for a 1 000sqm plot in Athol, Johannesburg, with a wine cellar, outdoor entertainment area, housekeeper’s accommodation, multi-car garage and a swimming pool.
The Atlantic Seaboard, City Bowl and Southern Suburbs, Bloubergstrand, Table View, Noordhoek, Strand and the winelands. Seeff says the demand from Joburgers extends all the way along the Garden Route.
What buyers need to know:Seeff’s advice to buyers:
- Top-end areas such as the Atlantic Seaboard will be as much as 40% to 50% more expensive than Sandton. “Clifton, Bantry Bay, Fresnaye and Camps Bay are almost without comparison in terms of what you will pay versus Sandton.”
- Views, and especially a sea view, will cost you 30% to 40% more, depending on ?the area.
- A Waterfront apartment will cost you upwards of R8m for a small unit – the same price as a reasonably luxurious home in Morningside.
- A 3-bedroomed townhouse close to the beach in Big Bay/Blouberg will cost R2m to R4m but the house will be quite small and the plot 200swm in size at the most. A similar house in Randburg or Northriding will cost around R1.6m to R1.8m and you are likely to get much better finishes.
- Cape Town houses, save for those in Bishopscourt and Constantia, tend to be on smaller plots.
- Don’t underestimate the traffic.Advice from David Gibbons, PropertyFox:
- As a general rule, you’ll get more erf for your buck in Joburg. For the same sum, you could probably get an 850sqm home in the Cape versus a 2-acre (8 093sqm) property in Gauteng.- Houses sell quickly, often with a turnaround time of two weeks, while in Johannesburg the turnaround time generally exceeds 90 days, so it is wise to wait until you’ve sold your Gauteng property before purchasing a new home in Cape Town.
This article originally appeared in the 15 June edition of finweek. Buy and download the magazine here.
