Desperate property sellers are flooding the market, with properties being offered at knockdown prices around the country, including certain areas of Cape Town.
This property market “bloodbath” has been fuelled as cash-strapped homeowners buckle under the pressure of a global economic downturn, escalating inflation and debt levels, a tight labour market, stricter credit laws and the property slump.
There are “hundreds, if not thousands” of distressed sellers across South Africa, according to estate agents, property experts and auctioneers canvassed by the Cape Times. While there were fewer desperate sellers in Cape Town than other parts of the country, the city was awash with bargains in densely developed areas where there were a surplus of properties for sale.
The areas include Tableview, Parklands and Muizenberg.
However, other areas such as the Atlantic Seaboard have bucked the trend and are reporting thriving sales figures.
Many property owners who have been forced to sell at fire-sale prices are those who bought in the leisure sector during the boom years, especially in upmarket golf estates.
For example, a vacant plot at the prestigious St Francis Links in St Francis Bay starts at R175 000 for 800m² compared to R370 000, which was the asking price in 2005.
A city auctioneer, who spoke to the Cape Times on condition of anonymity, described the market as “a bloodbath out there”, saying many people were selling their properties at drastically reduced prices in an attempt to offload them.
Some examples of bargains available include:
l A four-bedroom house in Gordon’s Bay with sea views is expected to fetch R3.5 million on auction, which is about R500 000 to R1m below its market value.
l A three-bedroom house in Wynberg, which had been valued at R1m, went under the hammer for just R650 000.
l Langebaan Country Estate is offering a basic 849m² plot for as little as R99 000 – priced at about R350 000 in 2006 – or R145 000 for a prime plot next to the fairway.
Prospective buyers can also scoop up a two-bedroom duplex that went on the market for R995 000, for R650 000 in Shelley Point Golf Estate in St Helena Bay.
l And while it might be difficult to find the rare bargain in upmarket areas such as the thriving Atlantic Seaboard, a Clifton property that went on the market for R16m was sold for R8.5m – almost half the initial asking price – a few months ago.
Auction Alliance auctioneer Ismail Hendricks said that for the next 18 months it was “absolutely the right time” to hunt for a bargain before the market began to pick up in July 2013. Some owners, he said,
were willing to sell for up to 30 percent below what the market value should be – and in cases where they bought during the height of the market five years ago, they were willing to sell for up to 40 percent less than what they bought for.
Re/Max Property Centre principal broker Trevor Courtney said there were many distressed sellers desperate to sell. “There are hundreds, if not thousands, of distressed sales across the country,” he said.
Many sellers wanted to let their properties go before their bank intervened, so they “put their properties on the market for low prices”, said Justus Brandt, the owner of the Re/Max branch in St Helena Bay. One of Brandt’s clients, who bought his vacant plot at Shelley Point for R595 000 in 2005 had to sell it for less than half the price at R275 000.
Property expert Alon Kowen, whose company Pure Capital specialises in distressed sales, said desperate sellers were most often found in areas that had an over-supply of sectional title units, such as Tableview, Parklands and certain pockets in the Northern Suburbs. “But you can’t buy in the hope of making an automatic profit,” said Kowen. “It’s a depressed market, so you might lose out trying to sell again. You have to buy to live in or rent.”
He advised that the best way to find a bargain was through a local estate agent, who would know who the distressed sellers were, or a reputable auction house. However, he warned to watch out for hidden costs.
Richard Arderne, Pam Golding St Francis Bay’s franchise principal, said there were also bargains to be found on some of the country’s most celebrated golf estates.
However Dogon Group Properties CEO Denise Dogon said this was not the case on the Atlantic Seaboard. “I wouldn’t say it’s that there are bargains. People are being more realistic. They’re realising that prices can’t keep going up as they did a few years ago,” she said.
She confirmed that her group had sold a Clifton home for R8.5m, but said the owner’s previous agency had vastly over-priced it at R16m.