Property market provides opportunities at both ends of the scale

© Peter Titmuss – 123RF.com

While the volumes are no doubt down, this is at least in part attributable to lower stock volumes and the pace of new stock coming onto the market that remains too slow to meet the demand.

Looking at the activity recorded by Propstats for the Cape metro for example, this year has already seen real estate transactions worth about R12.5bn recorded at an average price of R3m, 26%-odd more than the R9.9bn of 2010. The average price is also about 50% higher than in 2010 when it was at around R2m.

At the top end of the market too, we can see a much improved position compared to 2010, the last mini-boom period for the market. During that year, only about 20 transactions worth just under R880m was recorded for the metro for the entire year. This year, there has already been about 40 transactions with a combined value in excess of R1.22bn.

Secondary markets

While the bulk of the demand remains in the primary housing sector, many of the secondary markets continue reporting good activity, says Seeff. Holiday areas along the Garden Route such as Plettenberg Bay along with hot spots such as Hermanus and Pringle Bay are still reporting good demand as are West Coast villages such as Langebaan.

We also expect the downturn to be less impactful than what it was post 2007/8. This is largely attributable to a much improved stock situation. We for example do not have the flood of distressed properties and second homes that we had to contend with then. The subsequent tightening of the credit granting criteria has to a large extent mitigated the risk of wide scale financial distress in the property market.

Over the last two years in particular, we have seen a significant mopping up of the properties that had been sitting around on the market. So, yes while demand has slowed in some areas, most high demand urban areas are sitting with fairly tight property inventory levels coupled with still healthy demand.

That gives us a still nicely balanced market, says Seeff. The pace of new properties coming onto the market also remains fairly slow and we believe that this will help sustain reasonably good activity throughout this year and into the first quarter of next year.

Quick selling time

Provided that sellers are realistic with their price expectations, they can still look forward to good offers and a fairly quick selling time. Given the tight property inventory levels, homes will on the whole still sell faster compared to five years ago, save for the very top end of the market where buying is in any event always very selective.

Having said this, even the top end of the market is still seeing healthy demand and stock shortages as wealthy buyers continue seeing Blue Chip areas such as Cape Town's Atlantic Seaboard and Southern Suburbs as a solid store of wealth, says Seeff.

On the Atlantic Seaboard alone, sales of R20m-plus properties is already just short of R900m with several high value transactions ranging to R29m for vacant plot in Bantry Bay and R111m in Clifton. As alluded to above, this is still significantly better than trade in any year as far back as pre-2007/8.

The picture is similar in the top end southern suburbs neighbourhoods such as Bishopscourt and Constantia, says Seeff. This year, sales here already amount to about nine transactions worth R270m compared to about six sales worth a combined R176m for the whole of 2010.

For buyers, this means they are able to still take advantage of the interest rate savings on offer. Combine this with the slowed price growth and it is a good time to buy again. All in, we see a market that provides plenty of opportunities at both ends of the scale, thus a well-balanced market, says Seeff. For sellers too, it is still a good time to sell.