South Africa’s economic slump and weak business confidence, coupled with low demand, slow sales and an oversupply of stock, are the reason why sellers in Cape Town’s Atlantic Seaboard and Constantia Upper are slashing prices of their homes by millions of rand, says Ross Levin, managing director of Seeff Atlantic Seaboard and City Bowl.
Levin said that due to the weak demand at the upper-end of the market, sellers are offering steep discounts to attract buyers.
“Some recent sales have been concluded at anything between 20 and 50 percent below the asking prices.
"The market is already down by 40 percent since 2016/17, and despite the expected uptick following the election, the reality has been a further decline of 15 percent in value generated during the first half of this year.
"High-end sales remain especially slow. Consequently, there’s plenty of good stock and prices are falling,” said Levin.
He said although there was better demand below the R5 million mark, the market was slow above R15m.
“Price growth has been flat and is actually in deflation in many areas. At the same time, stock levels are up and properties are taking longer to sell.
"The result is that sellers have been waiting patiently for the market to turn, but many are now keen to sell and are more negotiable.
“Buyers should use this time to put in offers. If you work with a skilled local agent, they will be able to guide you in terms of what the seller would be prepared to look at.
"Buyers should take care not to wait, as it does seem that, although prices are down and sellers are negotiating, prices seem to have stabilised,” he said.
Levin said areas such as the Atlantic Seaboard, Waterfront and City Bowl were excellent real estate belts that delivered outstanding value growth for owners during the property upswing of 2013 to 2017/18. By investing now, buyers could find excellent value.
Luxury market specialist Lance Cohen said he has several high-end listings where the prices have been reduced by millions of rand and wealthy buyers have a real opportunity to find excellent investment value.
The latest Propstats sales data showed that it now takes about 126 days to sell, twice as long as last year’s 75-odd days. Atlantic Seaboard sales were coming in at an average differential between the asking and selling prices of 19.9 percent, with some deals concluded as much as 20 percent to 50 percent below the asking prices.
Examples include recent Camps Bay sales of 50 percent below asking price on a R25m sale, 20.5 percent below on a R11.95m sale and 27.4 percent on a R9.5m sale.
Levin said Seeff has seen good activity even below the R5m “magic mark”, with the average price differential at about 9.7percent. Apartments in Sea Point have sold for up to 21.3 percent below the asking price.
Levin said the median sales price for apartments at the V&A Waterfront Marina has declined by 47 percent since 2017 and by 24 percent since last year, and is now below that of 2013.
Natalie Muller, Seeff’s rentals manager for the area, said that as a result of an overstocked market and economic pressure, a swanky Atlantic Seaboard property can now be rented at a fraction of the price of buying.
“At R24000 a month, you can find a two-bed flat which costs around R5.25m in Camps Bay, less than half the R51500-a-month bond repayment and a saving of more than R600000 in transactions costs. A three-bed townhouse in Camps Bay with a price tag of around R7.45m will cost about R73000 a month if bonded and almost R80000 in transaction costs. You can rent it for about R35000 a month,” said Muller.
According to Janine Stevenson and Steven Holvec, Seeff’s agents for Constantia Upper, sellers were having to reduce their asking prices on the back of a significantly weaker market compared to two years ago.
Propstats data showed that the area was down by about 42 percent in total rand-value sales over the last year.
Samuel Seeff, the chairperson of the Seeff Property Group, said the industry was in one of the best buyers’ markets in decades, particularly at the upper-price levels.
“The favourable buyers’ conditions are supported by the low interest rate and keen competition among the banks to grant mortgage loans, and buyers should start taking advantage of the opportunities,” he said.
Meanwhile, Durban’s North Coast is set for growth, according to Seeff properties.
Tim Johnson, principal of Seeff North Coast, said Ballito was now a sought-after investment destination with many people investing in properties there, either to let out as short-term or long-term rentals or to reside there and commute to work weekly.
“Following the opening of King Shaka International Airport in 2010, there has been huge growth in air traffic, where estimations now predict that passenger arrivals are expected to hit the million mark by 2025.
“In May this year, British Airways announced direct flights to and from King Shaka to the UK, adding to the growing list of direct international flights which has encouraged many business people and investors to buy homes in the North Coast.
“Ballito’s permanent population has grown from 12000 to 30000 residents in just more than 10 years, and even though more than R2.7bn in residential sales per annum has been achieved during the past few years, an additional R3bn has also occurred within the new estates between uMhlanga and Ballito in the past 18 months,” said Johnson.