In just under seven years the residential property market in key areas of the Western Cape is again approaching the levels last seen before the spectacular downturn in 2007/ 2008, when it lost 39 percent of its value and dropped 46 percent in unit sales.
This has emerged in statistics highlighted by Pam Golding Properties (PGP).
The recovery is remarkable, and most notable in the traditionally, top-end value quarters of Cape Town. Not surprisingly, the best performers in the recovery have been where the money has mostly always been - the Atlantic Seaboard, City Bowl, CBD, and certain areas of the Southern Suburbs.
With a proven track record, these sought-after locations remain sustainable throughout the various property cycles, enjoying a high demand from local buyers as well as those from around the country. This includes regions such as Gauteng and KwaZulu-Natal, a factor further contributing towards the stock shortages being experienced in these popular Western Cape suburbs.
A recent review of the Western Cape Metropole showed an overall recovery close to the levels before the crash when the market dropped by a spectacular R6.17 billion and 3 369 units. Recent figures reflecting the recovery period from after 2008 to the end of 2013 show a 53 percent increase of R5.1 billion in value and a 36 percent increase of 1 432 more units sold.
Dr Andrew Golding, CE of the Pam Golding Property group, says these results indicate the extent to which the market has recovered. “This recovery has been, in our view, the result of a combination of factors including accumulated pent up demand, gradual easing of stringent mortgage lending criteria, a rising stock market with some profit-taking and consequent property investment, increased foreign interest off a very low base and finally increased consumer confidence when compared to 2007.
“The market is currently characterised by a significant shortage of stock, buyer competition for properties and gradually increasing house price appreciation, all factors pointing to a traditional up-cycle. This recovery only started to gather real momentum 18 months ago and so all things being equal, and notwithstanding the seemingly rising interest rate cycle we find ourselves in, we believe the current market conditions are here to stay for the foreseeable future.’’
“The market appears to be driven by the return of investor interest and a high percentage of cash buyers in most areas of the Western Cape. There are also ‘hot spots’ of foreign buyers, with seasonal distribution of sales,” says Laurie Wener, MD of PGP Western Cape Metro region.
Market performance in 2013 compared to 2008 on the Atlantic Seaboard, improved by 41 percent
in unit sales (1 654 vs 1 180) and 40 percent in terms of value. Southern Suburbs unit sales increased 30 percent (2 686 vs 2 063) and 54 percent in value, and in the City Bowl and Central City 53 percent more units were sold (5 371 vs 3 939) at an increase in value of 36 percent.
“It’s interesting that total unit sales of luxury properties of R10 million and more increased in 2013 by 60 percent over 2008 (193 vs 121) and 46 percent in value.
“Specific area highlights in this category include the Atlantic Seaboard, with 26 percent increase in unit sales (113 vs 84) and 35 percent in value; Southern Suburbs increased 66 percent in unit sales (56 vs 35) and 42 percent in value and City Bowl/Central City leapt by 1 000 percent in unit sales (20 vs 1) and 1 556 percent in value. Of course, the most spectacular increase percentages occur where the initial sales were low,” says Wener.