Depressed economy taking a toll on Cape Town's high-end property market
According to a property report released by Wesgro on Monday, the market activity in areas such as Green Point, Sea Point and the Waterfront have seen its sectional title markets slow down sharply. Properties in the Waterfront have registered the lowest number of sales in the past 10 years.
Author of the report Carola Koblitz said: “Many people have been talking about the decline in the property market over the past year or two. What we discovered with this research is that an area, for example, like Green Point the values have been declines more than over the past three years. They are not losing interest in the property market instead they are holding on to it.”
The property report also showed that the market activity in the City Bowl started slowing before the Atlantic Seaboard and areas in the Southern Suburbs.
The data in the report was drawn from a variety of sources including the provincial government’s Treasury’s Municipal Economic Review and outlook (MERO) 2018, the South African Property Owners Association (Sapoa) quarterly assessment of various commercial nodes, Lightstone Property’s overview of residential markets, and rental and sales values as they periodically appear on Property24.
The report said the City Bowl housing market started slowing down before the Atlantic Seaboard and Southern Suburbs, “and was indeed the first area show signs of the slowdown which would ultimately be manifested through much of the City of Cape Town’s housing market.
#CapeConference The report also shows that freehold prices In Green Point significantly declined over the past year while sectional title prices grew steady. @TheCapeArgus @IOL pic.twitter.com/vQvPL5BkIu— Marvin Charles (@MarvinCharles17) December 9, 2019
However, Wesgro chief executive Tim Harris remained upbeat, saying: “The bottom line in property is that it is always somebody’s market.
"While property in the Western Cape over the past few years has been extremely desirable, and prices rose quite steeply accordingly, recently we’ve begun to see a stabilisation - a normalisation, if you like. And that’s a good thing for investors right now, we believe,” Harris said.
Rob Vanlierde, of Robshaw Property group, said: “There is a large segment of the sectional title market that is for investment purposes and which is often speculative in nature. The sectional title market is therefore more influenced by market sentiment than freehold property.
"The CBD, and especially the Atlantic Seaboard, are areas that have shown good investment returns and attracted a lot of investors. Market sentiment peaked at a high in 2017 and has since dropped off for a number of reasons including slow economic growth, government policy uncertainty and an increase in the supply of luxury property.
"This drop in market sentiment is reflected in the lower number of sectional title sales for 2018 and has also had a knock-on effect to the freehold market.”
Vanlierde said because of the tough economic conditions, residents living in high-end areas were losing interest, “think they are nervous that their property might not have increased in value by as much as they would have expected or might even be worth less than they bought it for. There’s just less confidence when buying,” he said.