Western Cape's property prices still on an upward path

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.

This four bedroom house in Constantia Upper, Cape Town, has an open-plan kitchen, lounge with fireplace, study room and a landscaped garden. It is on the market for R19.5 million - click here to view.

This is according to chairman of the Seeff property group, Samuel Seeff, who says 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.

Seeff says with that comes a rise in the demand for homes to buy and rent. Lightstone data shows that some R18.5 billion in real estate transactions has already been recorded for the metro over the last year, and 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 in the top-end suburbs as well.

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.

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

This property in Bishopscourt offers six bedrooms, high ceilings, covered patio, manicured garden and a solar heated swimming pool. It is priced at R29 million - click here to view.

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

“Tourists too are flocking to the city. Already a world-class destination, we will soon see more cruise ships as our own cruise terminal gets underway at the V&A Waterfront. We may even see a grand prix as early as 2017, according to recent news reports.”

He says the fact that Cape Town is the best run metro in the country is a big drawcard for investment, property included. Almost not a month goes by without yet another influential international tourism accolade added to an already impressive list of awards for the city, he says.

People come from across the continent and globe to visit, reside and buy property in this area.

While confidence in the Cape remains strong, the latest Business Confidence Index from SACCI, the South African Chamber of Commerce and Industry, has put business confidence at a 16-year low.

Add to that the economic impact of the energy crisis and poor perception of most provinces when it comes to service delivery and infrastructure, and you can see the attraction of the Cape.

Seeff says this also impacts confidence in property as a store of wealth.

This R4.995 million home in Langebaan Country Estate, Langebaan, has four bedrooms, TV room, study, and braai area.  Click here to view.

Buyers are not only voting with the feet when it comes to the Cape, but are prepared to pay significantly more for property in this area compared to, for example, Sandton, the financial and wealth hub of the continent and especiallyPretoria, the country’s de facto capital and governmental seat.

“In Sandton, only a handful of residential property transactions are concluded above the R15 million price mark. In Pretoria, almost nothing sells above the R10 million price mark,” he says.

“In Cape Town, however, a R20 million sale now hardly lifts an eyebrow. Since the start of last year, for example, about 82 sales above R20 million to the total value of almost R2.5 billion have been concluded in the Cape metro.”

Seeff says the value of Cape property can also be illustrated by looking at the comparative average cost of a luxury family home of 700sqm to 800sqm with four bedrooms, multiple garages and a swimming pool. In Pretoria, you will pay around R5 million to R6 million, in Sandton, probably around R10 million to R11 million.

In top-end areas of Cape Town’s southern suburbs such as Constantia and Bishopscourt, you would pay around R16 million to R20 million. On the Atlantic Seaboard suburbs such as Clifton,Fresnaye and Bantry Bay, however, you will be looking at upwards of R20 million and R30 million, to around R100 million.

This four bedroom house in Onrus, Hermanus, has a fireplace, study, wine cellar, indoor pool, braai area and landscaped garden. It is selling for R8.2 million - click here to view.

“Looking ahead to the remainder of the year, we expect the Cape property market to remain active. While sales volumes may well be slowing in some areas, this is in large part attributable to a lack of stock, rather than a significant slowdown in demand,” he says.

While FNB points to a market average of around 9.1 weeks for the metro, well-priced properties under the R1.5 million 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.

Seeff says Capetonians are also buying second homes again.

Many 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 says.

“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 hotspot for foreign holiday home buyers,” he says.

“Since the start of last summer, we have, for example, seen sales to foreign buyers of about R1.4 billion across the metro.”

He says regardless of where you buy, you are likely to make a good investment. The location is undeniably world-class. The mountains, the sea and yacht-lined bays, wine farms and just about all of the food and entertainment than you could want for.

From transport to sport and recreation, top medical care and hospitals located across the metro, residents have access to excellent infrastructure.

The Cape offers top-class education as well, including some of the most sought-after schools in the country, four universities along with film and creative schools, hospitality training, business schools and more, says Seeff.