Atlantic Seaboard sectional title prices ‘correct’ by 20% – Greeff
The sectional title market in Cape Town has shown aggressive growth since the property market started making its recovery from the global financial crisis in early 2013 with year-on-year increases of roughly 20% and, in some instances, up to 30%. This is according to Ryan Greeff, director and senior consultant at Greeff Christies International Real Estate.
In his review of the immediate past business year Greeff states that property prices have shown a correction this year (2018) “predominantly because yields have come under pressure given the steep price increases and as a result of Airbnb being put under pressure due to the water crisis. Increased levels of supply with many new developments coming on line and affordability constraints have also been contributing factors to this correction”.
“Given the affordability constraints, we are starting to see purchasers looking outside of areas near the city and venturing out to Western Seaboard territories which is starting to fuel growth in those areas,” he said. “Other areas that are starting to show signs of gentrification are Salt River, Maitland, Brooklyn and Rugby which are slowly becoming the new Observatory and Woodstock.”
He said it has been encouraging to see that President Cyril Ramaphosa’s recent stimulus strategy is starting to pay off, taking the county well out of recession territory in the last quarter.
“The elections always play a significant role when it comes to sentiment, especially leading up to them,” he said. “Despite tough trading conditions whereby a host of companies have closed down offices in prominent areas, as a group we have shown year-on-year growth and have had some exciting expansion into key areas such as the Atlantic Seaboard, Kleinmond, Hermanus, Breede Valley, the Winelands and Simon’s Town.
“The ‘buy to live’ sectional title market, which is primarily made up of your 2/3 bedroom apartments, also indicated a price correction of up to 20% largely due to house price affordability coming under pressure given the high levels of increased household inflation and a steady increase in supply. Price points that are still showing decent levels of activity are R2m to R2,5m; the R3m to R5m transactions are still active in blue chip areas, however they tend to take slightly longer to move given that the purchasers at this higher range are somewhat scarce.”
In the freehold market, Greeff said his company has seen a similar shift to that of sectional title in both price points and volumes sold.
“We are finding that more first-time home buyers are being priced out of the market and are therefore electing to go for sectional title to get a foot in the property market door,” he said, noting that the fact that the significant reduction in Gauteng semigration, the high incidence of which had fuelled house price growth over the last five years, was also a factor in property price corrections.
“European (buyers) are still active in the category, particularly in the R7m to R15m range which has propped up the upper-end segment. Price points that are still relatively active are between R2,5m and R4,5m.
“Despite all the political and economic noise, the banks have remained bullish and have relaxed their lending criteria which has assisted in keeping the property market somewhat propped up and stable, compared to the SA stock market last year.”
Words: Blake Wilkins