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Cape market ‘talked up’ – Alexander Swart

18th century cape dutch house resizeAlthough Cape house prices have increased by double digits in certain nodes, “many estate agents continue to talk up and exaggerate the strength of the Cape market”.

This is according to Rowan Alexander, director of the new Brackenfell-headquartered company, Alexander Swart.

“It is absolutely true that this is still a very good place to buy and further price increases are likely,” he said. “However it has to be recognised that our figures show that from the start of this year on an annualised basis, value rises have been around 10%, (2% to 3% lower than in previous years). The 2% interest rate rises of the past three years and growing inflation have made the potential buyer’s decision a great deal more difficult than it was only a year ago.”

According to Alexander, three years ago a buyer earning R58,000 per month might have qualified for a bond of R2m; today, however, – supposing his income remained at much the same level – he would be eligible for a bond of only R1,735m.

“In the same time period a R2m house might have increased in value to R2,550m (9.5%) at a conservative estimate,” said Alexander. “Bearing in mind that wage increases over the past three years have not risen at anything like the same rate enjoyed by property prices, it is clear that today’s buyer faces a tougher situation than he did only a few years back.”

Rental returns keeping pace ahead of inflation

The Cape rental market is also cooling, according to Alexander, who said rental prices and returns per annum in the Brackenfell area (which is typical of most in greater Cape Town) have been reduced to around 8% – especially in homes renting above R15,000 per month.

“Landlords are still on a good wicket, but they, too, now have to face the realities of today’s more difficult market,” he said.

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