The Cape Town property market is holding its own in the economic downturn with sales regularly being concluded and even some staggering prices achieved.
Real estate professionals in the city say the combination of pent-up demand, falling prices, and low interest rates is definitely working in the city’s favour, but that correct pricing is critical.
For Dogon Group Properties, their winter 2020 sales have been “the best ever” for what is traditionally a quiet time of the year, reports founder Denise Dogon. Sales were in excess of R150m in July alone.
“Amongst the notable deals concluded by our team recently was the sale of three properties for just over R20 million, a home in Constantia for R26 million and another exceptional home sold for just over R50 million in Bantry Bay.”
Alexa Horne, Dogon managing director says some sellers who were reluctant to put their homes on the market in these current times have resorted to doing so and this has “injected some exciting stock into the market.”
“We have experienced several sales taking place within 24 hours of listing the property, provided they are priced correctly.”
Being in Cape Town helps as there is not only demand from locals but buyers in other provinces, she adds.
“Interesting to note is that we are also seeing buyers from Gauteng, who are considering relocating, showing increased interest in Cape Town properties and the R50 million house sold was to a buyer from Gauteng. There is also renewed interest from foreign buyers who are keen to take advantage of lower prices and the great exchange rates.”
Horne emphasises though that the right price is crucial to these successful sales figures. Although sales activity slowed sharply during the national lockdown and the subsequent delays in reopening the Deeds Office, Alisdair Crofton, franchisee for the Rawson Property Group Cape Town CBD agrees that the brisk pace of recovery in property sales over recent weeks has been surprising.
“More first-time buyers and out-of-town investors are taking advantage of the record low interest rates. Sellers are also motivated to sell faster and are therefore less likely to push for top-end prices.” He says there is a steady flow of sellers looking for valuations with reasons ranging from needing cash to selling investment properties in order to prop up a business for a while.
“The next six months moving into the first quarter of 2021 will be very interesting.” Basil Moraitis, Pam Golding Properties regional manager says there has been a “significant” 38% increase in listings coming to market when compared to the period prior to the lockdown. This indicates that this market is still very much a buyer’s market but correctly pricing new listings is critical to success.
Citing PropStats data he says: “June and July 2017 recorded 28 concluded sales at an average selling price of R2 509 743, just 4.7% less than the listed price. For the same period in 2020, after the recommencement of residential real estate activities, there were 15 sales at an average selling price of R2 016 667, 14.6% under the listed price. This is a correction of about 20% off the market highs in 2017.”
There is no doubt that property prices in the area have declined over the past six months but Tasso Evangelinos, chief executive at the Cape Town Central City Improvement District (CCID) says the price correction is “an inherently good sign as it means that the previously elevated prices are adjusting to prevailing economic realities”.
Echoing this, Ryan Joffe, owner of Ryan Joffe Properties says the adjustment in property prices is also a welcome sign of things to come, specifically, more affordable housing within the city centre. Evangelinos adds that the Cape Town’s CBD offers “excellent investment opportunities for first-time buyers and savvy investors”.