Estate agency boss, Seeff’s Samuel Seeff, recounts the highs and lows of 30 years in property:
1983-1987: The interest rate was in the 20%-25% range and you could not sell anything in Camps Bay. Just five years ago, you could still buy in Camps Bay for R6 million. Now the entry-level price is R10m.
1992/3: South Africa was under major threat of a revolution and the market was practically dead. For most of the 1990s the interest rate was 18%-20%, peaking at 25.5% in 1998.
1994: First democratic elections and a new era for South Africa, but the interest rate was still at 16.25% and remained high throughout, peaking in 1998 , despite 2.5%-3.5% economic growth.
1998: A slump in economic growth to just 0.5%, picking up to 2.5% in 1999 before the economy started its serious uptick towards the 2000-2007 boom phase. Prior to 2002, South Africans weren’t buying, but foreigners were, seeing the value of property in Cape Town.
2000-2007: Economic boom with growth rates in the 4%- 5.5% range, yet interest rate was still in the 13%-15% range, only coming down to 10.5% (the current level) in 2005.
2007: Introduction of the National Credit Regulator, which had a massive impact on the market and buyers’ ability to obtain finance. Banks tightened their lending, perhaps too much for a time. 2008: The global financial crisis hit, the market tanked and the interest rate climbed to 15.5% by mid-year. 2010: We thought the World Cup was going to bring buyers aplenty. It did not. Save for the odd foreigner, there was no large-scale uptick in luxury home buying.
2010-2014: A very slow market recovery despite an interest rate of 8.5%-9.5%.
2014-2017: Property boom which outpaced economic growth, especially in high demand areas in the Cape in particular.
Prices soared: Then and now
During 1992/1993, a new seafront development, Clifton View, came on to the market. “We could not sell a massive 250m² apartment with two undercover parking bays for R1.5 million.
Today, you will pay R30m, and a parking alone will cost you R1.5m,” says Seeff chairman Samuel Seeff. In 2009, Seeff’s sales for the year dropped by 25% year-on-year. This year, they are only down by 5% year-on-year, “just to once again illustrate that this market is nowhere near as challenging as it was during the global financial crisis.
Perhaps we just tend to measure the market against the boom-phase performance rather than the average market performance”, says Seeff. Property remains a long-term investment that needs to be maintained in order to protect its value, says Tony Clarke, managing director of the Rawson Property Group.
The longer property owners can afford to hang on to their properties and keep them in good condition, the more freedom they will have to wait out any downward trends and benefit from the inevitable upswing. However, he adds: “There is still likely a hard road ahead for the average consumer, despite the possibility of a more affordable property market on the horizon.”