Real estate sellers are now offering steep discounts to attract buyers.
Over the last three months, sellers on Cape Town’s Atlantic Seaboard and Constantia Upper areas have reduced their asking prices by up to R10 million to conclude a sale according to the latest sales data.
Ross Levin, managing director for Seeff Atlantic Seaboard and City Bowl says as a result of the continued weak demand at the upper price levels, sellers are now offering steep discounts to attract buyers. Some recent sales have been concluded at anything between 20%-50% below the asking prices.
The market is already down by 40% since 2016/17, and despite the expected uptick following the election, the reality has been a further decline of 15% in value generated during the first half of this year. High-end sales remain especially slow.
After some reluctance, sellers are negotiating, creating opportunities for buyers to find more affordability in a market that has not been the case for many years. Lance Cohen, luxury market specialist says he has several high-end listings where the prices have been reduced by millions of rands and wealthy buyers have a real opportunity to find excellent investment value right now.
Propstats sales data shows that it now takes around 126 days to sell, twice as long as last year’s 75-odd days, and Atlantic Seaboard sales are now coming in at an average price differential between asking and selling prices of 16.9% with some deals concluded at as much as 20%-50% below the asking prices.
Examples include recent Camps Bay sales of 50% below asking price on a R25m sale, 20.5% below on a R11.95m sale and 27.4% on a R9,5m sale.
In Bantry Bay, a R45m asking price was dropped by 40% to R27 million. In Fresnaye, a vacant plot price dropped from R35m by 27.2% to R25.5m and the average price differential in the suburb is now 23.4%. In Clifton, an apartment sold at 40.4% below the asking price and here too, the price differential is now at 20.3%.
Even under the R5m “magic mark” where we still see good activity, Mr Levin says the average price differential sits at around 9.7% with apartments in Sea Point having sold for up to 21.3% below the asking price.
The median sales price for apartments at the V&A Waterfront Marina has declined by 47% since 2017 and by 24% since last year, essentially now sitting at a level below that of 2013. If you wanted to buy, now is the time, he says.
As a result of an overstocked rental market and economic pressure, you can now rent an Atlantic Seaboard property at a fraction of the price of buying, says Natalie Muller, Seeff’s rentals manager for the area. At R24 000/month you can find a two-bed flat which costs around R5,25m in Camps Bay; less than half of the R51 500/month bond repayment and a saving of over R600 000 in transactions costs.
Constantia Upper sellers are also having to reduce their asking prices on the back of a significantly weaker market compared to two years ago. Janine Stevenson and Steven Holvec, Seeff’s agents for the area highlight that Propstats sales data shows that the area is down by about 42% in total rand-value sales over the last year. Price drops of up to 25% on a R24m sale, 27.1% on a R15.9m sale, 26.6% on R10.9m sale and as much as 34.2% on a R15.95m sale have been recorded over the last three months.
Hout Bay is also seeing price differentials of up to 20% according to Stephan Cross, sales manager for Seeff Hout Bay and Llandudno. The price of one of the most unique homes has for example been reduced from an asking price of R39 million, to R29 million – that is a drop of R10 million (34%).
Naturally, the slow market conditions have resulted in properties taking about 60 days longer to sell with the time on the market now at around 25 weeks (or 5,5 months) compared to 16 weeks (or 3,5 months) in 2018, says Mr Cross. Where sellers only had to cut their asking prices by around 7% on average, this has increased notably to around 11% this year.