As the year moves into its second half and the South African property market enters its traditional winter slowdown, Pam Golding Properties (PGP) reports that the Cape Town property market remains buoyant, with particular confidence coming from local buyers.
Commenting on the property market, which has been the focus of worries of overheating in recent months, on Monday, Andrew Golding, CEO of the PGP group, said that after several months of frenetic activity, the market had slowed down only marginally over the winter period.
"There has been increased activity from South African purchasers, including a huge appetite for off-plan developments in virtually all areas. While property prices show no sign of abating after four years of steady increases, they are still relatively low by historic standards.
"Statistics indicate that last year's average house price for the country as a whole and in real terms (i.e. taking inflation into account) was R407,000, while the average price in 1984 in real terms was R476,700. South Africa's average prices are also still well below international property prices, meaning that the country remains an attractive investment opportunity for foreigners.
"With interest rates at their lowest level in more than two decades, the same can be said for local buyers, although concerns about a lack of affordability for first-time homeowners remain."
PGP agents across all areas of Cape Town report that they are selling particularly their lower- and middle-end properties almost as soon as they come onto the market.
New trends include keen interest from ex-pats who are either on the verge of returning home or are buying for investment purposes.
According to Golding, the foreign market had also started taking more of an interest in lower-end properties, in contrast to their previous predominant interest in only top-end properties.
These have now become a significant buy even for foreigners, thanks to the recent strengthening of the rand.
The scarcity of land available for development in many areas had led to the increased popularity of high-density developments, while controlled access complexes remained in high demand due to buyers' security concerns.
One area seeing a particular surge in interest is the Cape Town city centre. PGP's managing director for the Western Cape metropolitan area, Mick Joyce, said Cape Town was spearheading a trend towards central city rejuvenation, facilitating a previously unforeseen surge in growth and investor confidence in this area. Over the past 16 months, PGP had sold R500-million in new residential developments or re-developments resulting from the conversion of former office buildings into quality residential apartments.
These sales included some 570 units in historic buildings such as Mutual Heights, Cartwright's Corner, Mandela Rhodes Place and Namaqua House - with buyers ranging from overseas investors to local residential buyers and young business executives seeking a trendy home close to the office.
Said Joyce: "The construction of hotels and the Cape Town International Convention Centre on the Foreshore has played an important role in raising confidence in the city centre. The Cape Town Partnership, the city and International Marketing Council (IMC) have worked hard in laying an excellent foundation to market Cape Town as a destination, which has culminated in Cape Town being rated internationally both as a holiday and business destination.
"It has also resulted in high interest among home buyers in working and living in the city. This current interest in city centre lifestyle developments - in an appealing live/work/ leisure environment - is complemented by investment into areas such as De Waterkant and the Waterfront."
Another area enjoying ongoing buoyancy was the Atlantic Seaboard, where a diverse range of stock had seen prices ranging from R450,000 to R46 million. PGP reported that the R2.0 million - R2.5 million market had been especially brisk, with large capital appreciation of more than 20% growth in this sector.
Meanwhile, buyers in search of properties under the R1-million mark were finding value along the West Coast, where there had been a surge in activity over the past six to 12 months.
The Southern Peninsula was also attracting largely local interest, with a particular demand for properties in Fish Hoek, Simon's Town and Muizenberg. Some 20% of buyers in this area were investors looking for second or even third homes, and there was increasing interest in off-plan investment opportunities.
I-Net Bridge
Publisher: Business Day
Source: Business Day
