Cape Town property: Sales in opulent areas under severe pressure

Cape Town’s waterfront suburbs and affluent areas are under pressure, as the latest property figures show a slump in sales.

According to eNCA, the sale of waterfront properties is the lowest it’s been in a decade, however, in the city’s less sought-after, middle-income suburbs, there’s been an uptick in sales.

Cape Town has traditionally been the city where property sales are above the national average but that is no longer the case. 

On one of South Africa’s richest streets, where homes cost R60m and up, the past year has seen less enthusiastic multi-million rand purchases.

Affluent vs middle-income

Property mogul Lew Geffen said foreign buying in waterfront suburbs has almost dried up, attributing it to the instability within the country.

While Geffen has little hope of improvement in 2020, a local agent from Grosch Properties, Roslyn Grosch believes that the middle-income band will keep the property market afloat. 

“The infighting within the ANC and the general uncertainty, and the power, that’s adding fuel to the fire. Generally, we’ve been in recession for two years. Johannesburg was first, and now it’s come to Cape Town this year,” said Geffen. 

Property seekers are now finding homes in areas like Kuils River, 30km out of the city centre because they are more affordable. 

Grosch said that the area offers a wide variety of homes for a young professional, at a starting price of around R1.2m vs the R60m on the Atlantic seaboard. 

“People here don’t have to rent, they could own a home. It’s a lovely home, it’s very central, close to the N2, close to the wine routes, close to Stellenbosch, close to Strand. They are also lock up and go properties and low maintenance,” said Grosch.  

Cape Town properties took a dip earlier this year

As reported by TheSouthAfrican.com, in June 2019, house prices in certain key regions of Cape Town experienced a deflation.

A study released by FNB charts at the time showed how the real estate market was struggling in the south-west. 

As MoneyWeb pointed out, average prices on the Atlantic Seaboard declined by 5.1% year-on-year in the first quarter of 2019, a figure only made worse by the 4% rate of inflation. 

FNB economist Siphamandla Mkhwanazi explained that the market is currently going through a cycle.

The ratio between property prices and earnings should soon “normalise” according to the expert, leading to a more “meaningful improvement in affordability.”