Cash is still king in popular Southern Suburbs but demand for new homes are slowing
The majority of buyers in the Southern Suburbs don’t need bonds, explained Cindy Minnaar, Lew Geffen Sotheby’s International Realty area specialist in Newlands and Constantia. “I have worked in Newlands for five years now, and the majority of our sales have been cash,” she said.
Lew Geffen, Chairman of Lew Geffen, Sotheby’s International Realty said: “This is corroborated by Propstats data which reveals that only 9 (22.5%) of the 40 sales that took place in Newlands between 1 January and end May 2017 to date were bonded.
“The figures are similar in other sought-after Southern Suburbs areas during this period. In Constantia, just fewer than 40% of the transactions required finance with most bond applications being for around 50% of the sale price and in Claremont 48% of transactions were cash sales. For the same period in 2016, Newlands had 42 sales of which 16 (38%) required finance, 50% of sales in Claremont were bonded, and 29% of sales that took place in Constantia required bonds.”
The Newlands freehold purchase price per square metre has long been one of the highest in the southern suburbs, so the area generally appeals to more affluent buyers and while some buyers do apply for bonds, they generally don’t make the sale subject to bond finance, as they possibly have other means of financing the deal as well.
However, in spite of the continued prevalence of cash sales, the subdued economy has begun to affect buying trends, one of the most notable being a cooling in the demand for new homes.
Geffen explained that the appeal of the convenience and security offered by the new gated developments hasn’t waned but buyers seem to be becoming more price-conscious and, as the cost of building these upmarket new homes is relatively high, second hand homes are often regarded as better value.
Top photo: This home in the most sought after road in the heart of Newlands Village was recently sold for R10m to a local cash buyer