The Cape metro’s drop in property prices should be viewed as a natural correction in the market
News that the Cape’s dams are more than half full is welcome for the metro’s property market, as we move into the second half of the year.
There’s been much talk about the softening of house prices in the Cape, which until recently was the top-performing area in the country, but this should not be seen as cause for alarm. “In fact, this price correction should be viewed positively,” says Richard Day, Pam Golding Properties Group general manager.
“After more than a decade of accelerated house-price growth, especially in areas such as the Atlantic Seaboard where prices have increased by 650% in the past 15 years, what we are seeing now is a natural price adjustment.”
Seen in perspective, the fact is that the Western Cape remains a desirable place to live and invest, and it is still the top-performing regional market with a 10.6% price increase from January to June 2018 (PGP Index). The national average was only 4.25%.
The slowing of house price appreciation in the metro’s hot spots has also had the concomitant effect of boosting the market in other regions. Day says house prices in suburbs close to the City Bowl, offering many of the same benefits as their more expensive counterparts, are showing signs of growth.
Basil Moraitis, Pam Golding Properties area manager of the Atlantic Seaboard, adds that the recent price stabilisation has also been compounded by several concurrent factors, including concerns about water scarcity. Buyers are still buying and tenants are still renting, and properties that are at market-related prices will sell, says Emarie Campbell, Pam Golding Properties area manager for the Western Seaboard.
That being said, the current shift in the market means that savvy buyers are shopping around.
This is not the time for sellers, who are not serious, to test the market.
An oversupply of incorrectly priced stock will worsen the surplus and ultimately affect house prices.
Rental activity has been fairly brisk, but most of this is from tenants “shopping around”, says Dexter Leite, Pam Golding Properties Cape rental manager.
“The usual winter seasonal slowdown as well as the numerous new-build developments, coupled with the Airbnb properties coming on to the longer-term market, has added to the current oversupply conditions on rentals.”