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Cape Town Rental Property Bubble Has Burst !!

Posted on: June 13th, 2018

4 Reasons the Cape Town Rental bubble has burst

For the first time in years, Cape Town rental market is oversupplied. With demand low, landlords will need to re-evaluate their rentals and marketing strategies in order to find tenants.

As the heavens finally unleash the winter rains in Cape Town, the same relief is not felt by landlords in the cape town rental  area who are facing un-let properties for the first time in years. “Before property investors throw in the towel, this is by no means a reason to panic. Cape Town Rental is a resilient market and this shift is only a realignment that would inevitably follow the unprecedented growth the area has experienced in the last couple of years,” explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.We noticed a significant shift occur from around October 2017 that saw landlords facing vacancies for the first time in years.

property constantia

Grant Rea, Residential Sales and Letting Specialist at the Remax Living office that operates in the Cape, says that it is the first time in seven years that he has noticed a shift to an oversupplied and under demand rental market. “As a whole, we noticed a significant shift occur from around October 2017 that saw landlords facing vacancies for the first time in years. Previously, the demand was always significant enough to ensure each property found a great tenant,” he explains.

It is a harsh reality for landlords who have been used to an average gross yield per annum of around 6% and now have to be staring down the barrel of 4.5% to 5.5% yields. But, far from being a hopeless situation, Rea suggests that landlords simply need to reassess the anticipated returns. “Everything rents at the right price as everyone needs a home. There is no question that you will find tenants provided that the rental is competitive,” he advises.

What’s more, landlords might also have to revisit their marketing strategy. Rea mentioned that a search on one of the largest property portals indicated a total of 4,000+ rentals available across the City Bowl and some of the more affordable Atlantic Seaboard suburbs. This excludes a significant number of landlords that are offering their spaces privately across social media platforms and on Community Facebook pages.

“Agents and landlords will need to do just a little more to expose their properties to a wider audience. This includes video marketing and exposure on social media platforms, as well as creative wording for ads that highlight the best features and consequent benefits for a potential tenant. You may want to entice tenants by including extras like Wi-Fi, utilities and services like cleaning,” Rea suggests.

rental property cape town

Rather than being an ongoing problem that should raise caution for investors, Rea suggests the following reasons for the shift in an oversupplied cape town rental market:

New Developments
“Developers have taken advantage of the incredible growth and every conceivable space that was available to develop has been snapped up. As these buildings reach completion, the majority of the units go into the rental market. This problem will persist for the next two years or so as new developments are coming online now, with as many as 35 approved development and blocks nearing completion.”

Fall of Airbnb Hype

“Airbnb reached its tipping point during 2017 when the number of units available to let in the City Bowl and Atlantic Seaboard reached beyond 10,000. As more units flooded onto the short-term letting market, owners had to price their units more competitively to compete. Eventually, many landlords became disgruntled and have returned to letting long term again, flooding the rental market as a result.”

Semigration Slowed

“The media reports of the impending drought disaster in Cape Town resulted in those planning a move to the Mother City quickly changing their minds. Earning potential in Cape Town was also significantly lower by as much as 22% in certain sectors, as reported by CareerJunction’s salary review in the last quarter of 2017.”

Over-inflated Rent

“With most rental agencies only qualifying tenants who earn at least three times the rental amount and asking at least two months rental as a deposit, this has placed huge pressure on tenants. Combine this with the fact that the growth in income has been disappointing in relation to living costs, and you understand why many tenants have simply decided to move away from more expensive areas and rent elsewhere.”

“If you want to ensure you do not face long, drawn-out vacancies, then it may be prudent to speak to a realistic agent who can help you take a detailed look at the market to ensure that your rent is set at a competitive rate to attract a tenants in this market. Remember, they will be quite aware of the situation and will be seeking the best value possible. If you are facing vacancies, perhaps see it as an opportunity to critically assess the property and make necessary repairs and or upgrades,” Rea concludes.

rental property cape town

If you are looking for a rental property or planning to relocate to Cape Town we can offer professional dedicated assistance with every part of your move. See here for more details of our rental search service http://spacesa.com/rental-property-in-cape-town.php and more details of our relocation service http://spacesa.com/relocation-to-south-africa.php

12 things to consider before investing in a rental property Cape Town

Posted on: May 15th, 2018

Investing in rental property Cape Town can be a sound investment but it’s not for everyone. There are a number of factors to consider before you decide to go ahead.

Over the years you’ve heard great things from friends and various others about the benefits of investing in rental property Cape Town. It makes sense really. Renting a property represents a relatively sound way to pay the property off while it appreciates. Theoretically, once paid off, you should also benefit from an additional income stream should you continue leasing the property.

Investing in a rental property Cape Town is not for everyone though as there are risks involved and inevitably, issues crop up.

The following 12 points should give you a fair idea as to whether or not investing in a rental property Cape Town is for you:

  • Upfront costs: As is the case with any property purchase there are several significant up-front costs which need to be catered for. These include mortgage costs, attorneys’ fees, bank initiation fees and transfer duty. It goes without saying that you need to be in a financially sound position before you can consider extending yourself financially to a rental property. Qualification for a mortgage (if applicable) will depend entirely on your unique financial circumstances and your ability to reliably service a loan.

 

  • Ongoing costs: Again, as is the case with all properties there are ongoing costs which need to be factored in to your budget. Examples of ongoing costs include sectional-title levies (if applicable) rates and taxes, insurance and maintenance. It’s also a good idea to put away money for unexpected/emergency costs such as an insurance excess payment, re-tiling or damage which may not be covered by your insurance.

 

  • Ownership legalities: It’s important to consider the legalities involved with rental properties. For instance, how do you intend to register the property will it be registered in your own name, a family trust or a property holding company? In whose name will the loan be taken out?

 

rental property cape town

Cape Town Rental Property

 

  • Unlet periods: Do you have a plan/funds to cover the costs of your rental property if it’s standing empty? If you are depending entirely on the property being let all the time to cover the costs you may wind up in a sticky situation.

 

  • Rent: The rent you charge will depend on several factors. These include property type, location and proximity to transport and amenities as well as supply and demand. Obviously these points should play a major role in your property purchase decision. The more boxes a tenant can tick, the more likely you will be able to charge a premium.

 

  • A strong rental agreement: It is vitally important to have a strong rental contract in place before allowing a tenant to move in. Such contracts form the backbone of any legal disputes and effectively protect your rights as a property owner.

 

camps bay rental property

Cape Town Rental Property

 

  • Rental law: Are you aware of the law relating to rental properties and tenants’ rights? If not, ask your lawyer to provide a basic break-down of some of the most pertinent laws relating to this arena before committing to a purchase. You may find that you’re not comfortable with the legal framework.

 

  • Tax law: Owning a rental property doesn’t mean the rent paid is yours for the keeping. As a landlord you need to pay tax on the money received from tenants. Failure to do so can land you in hot water with SARS.

 

  • Rental property insurance: You may want to investigate the possibility of rental insurance. If a tenant fails to pay or damages your property and absconds, you could be left with a large bill and very little chance of recouping the money. This fee will of course, have to be added to your on-going costs.

 

  • Management: Another important factor to consider when weighing up whether or not to buy a rental property is whether you want to manage it yourself or use a property management company such as Space Home Search http://spacesa.com/cape-town-property-management.php. If you do handle the rental yourself, you will need to undertake all the duties relating to the property which can be stressful and time consuming. An agency will essentially carry out the same duties but at a cost.

 

Rental Property Cape Town

Rental Property Cape Town

 

  • Tenant vetting: In line with having a strong rental agreement, it’s also vitally important to thoroughly vet prospective tenants before allowing them to take up occupation. Be sure to obtain a comprehensive credit check and get references. Failing to do so could cost you dearly in the long term.

 

  • Furnished or unfurnished: It’s important to decide from the outset whether or not you are going to furnish your property. If you are going to furnish it, you will have to budget accordingly for the added expense and ongoing wear and tear. Obviously the rent would have to be adjusted accordingly but it may well be that neither you nor prospective tenants will be able to afford the added expense.

 

Careful consideration of these factors will help you make the right property investment decision. If you decide to go ahead with sourcing an investment property please get in touch with Space Home Search & Relocation, we represent the buyer and ensure we source the finest property at the best price. We are NOT estate agents, we are buyers agents.

Space can offer you a tailor made rental search service, to find a long term rental home here in Cape Town, whether you are:

 

  • Moving here on a work contract
  • Relocating to Cape Town from overseas or from other parts of South Africa
  • Looking for a short term solution before buying a new home through Space

Our service has been designed to:

  • Save you time because we know the market and we know where to find the best property
  • Ensure you chose the best areas for your needs to fit your location brief and your commute, if you have one
  • Take away the stress of dealing with numerous agents who are working for the landlord and not for you
  • Review the lease and negotiate additional aspects in your favour
  • Ensure you pay the right price for your home

http://spacesa.com/buy-property-in-cape-town.php

Prices of luxury Cape Town homes keep on soaring

Posted on: May 11th, 2018

Cape Town homes prices ended the year to March 19.3% higher compared to the same period in the previous year.

Cape Town homes have registered the world’s second-highest growth in luxury house price rankings for the period March 2017 to March 2018‚ behind Seoul in South Korea. This is according to the Prime Global Cities Index, published by global real-estate consultants Knight Frank. http://spacesa.com/buy-property-in-cape-town.php

The company said Seoul registered 24.7% annual growth for this period, despite policy makers’ efforts to control price growth‚ including new taxes on owners of multiple properties and tighter lending conditions.

Cape Town’s prices ended the year to March 19.3% higher compared to the same period in the previous year.

cape town property market

“Although the wider city market is cooling‚ a lack of supply in the prime areas we track in Camps Bay‚ Bantry Bay and the Atlantic Seaboard is pushing prices higher‚” Knight Frank said.

Deon de Klerk‚ head of wealth for Africa regions at Standard Bank‚ said Cape Town was fast becoming a truly global holiday destination and an increasingly desirable residential address for SA’s high-net-worth individuals‚ as well as those from abroad.

“The luxury residential property market in the city has really been able to capitalise on its new-found reputation as the ‘Monaco of the South’‚” De Klerk said.

Typical prices for Cape Town homes ranged from R1.2m for a small studio apartment to R30m for a penthouse apartment.

Two-bedroom‚ two-bathroom apartments with secure parking fetch about R5m on average‚ the report said.

In the last two years Cape Town has set South African records for both the highest-ever sale price paid for a residential home — R290m for a house in Bantry Bay — as well as the highest-ever rental price‚ R450,000 per month for an estate in Constantia. http://spacesa.com/buy-property-in-cape-town.php

cape town property market

Knight Frank said its latest index was a valuable means of gauging where luxury prices were headed at a time when — despite the global economy being in robust health — there were significant risks ahead in the form of rising debt‚ inflation and housing market regulation.

“As borrowing costs start to increase some of the world’s major economies‚ we expect prime price growth to moderate further‚” Knight Frank said.

Knight Frank said cities in Asia Pacific now accounted for five of the top 10 rankings in annual growth, including Guangzhou (16.1%) and Shanghai (10.9%) in China. Sydney (8.7%) and Melbourne (8.3%) in Australia also featured in the top 10.

Space Home Search is Independent, personal and confidential. Our exclusive buying agency finds and secures properties for private individuals, corporate clients and property investors. http://spacesa.com/case-studies_gt20_index.php

As professional property search consultants we work hard to understand what our clients want to achieve from their property investment.

cape town homes

We will find you the perfect home whilst relieving you of the day-to-day frustrations and time-consuming problems associated with house hunting overseas.

Years of property search experience and market knowledge in Cape Town are channelled into satisfying individual requirements in terms of location, price, architecture and internal configuration.

We have the expertise and contacts to source those elusive, very special residential properties that often never appear on the open market.

In addition, our knowledge of the market means that we can ensure that you purchase your new home for the best possible price, and we will guide you through the conveyancing process here in South Africa until the property becomes legally yours, representing your interests every step of the way.

Contact us now http://spacesa.com/contact.php

Constantia Property Cape Town

Posted on: April 30th, 2018

Constantia Property : The exclusive neighbourhood of Constantia is set in the Southern Suburbs of Cape Town, where the rolling wine lands meet suburbia. Home to an affluent community, this suburb is known for its beautifully appointed mansions and sophisticated residences.

Constantia Property is comprised of typically large plots with houses offering up to 5 bedrooms and expansive gardens, making it an ideal option for raising a family away from the tall buildings of the city.

This is one of our clients favourite locations as it offers good value compared to the Atlantic Seaboard, and on average we have saved over 16% discount on properties we have sourced over the past few years. Take at look at our service http://spacesa.com/buy-property-in-cape-town.php  and also a range of our past properties we have sourced for our clients http://spacesa.com/case-studies_10_to_20_index.php

Take a look at some examples of whats on the market today:

constantia property

Constantia Property Cape Town

 

5 Bedroom Constantia Wineland’s mansion

3 Cottages

2 Stables and large paddock

18,500 sqm land

65 Million Rand/ 3.8 million GBP/4.3 million Euro

 

constantia property

Constantia Property Herbert Baker classic

Classic Herbert Baker Build 1937

3,000 sqm land

7 Bedrooms

2 Cottages

Stunning high quality finishes

32 Million Rand /1,8 Million GBP/ 2.1 Million Euro

 

 

constantia property

Constantia Property

4 Bedrooms

5 Bathrooms

5 Reception rooms

Swimming pool

Staff cottage

Guest cottage

27 Million Rand / 1.5 Million GBP / 1.8 Million Euro


constantia property cape town

Private Estate Constantia

900 sqm property

2,500 sqm land

4 Bedrooms

4 Reception rooms

Modern open plan living

16 Million Rand / 1 Million GBP / 1.1 Million Euro

Constantia Property Private Estate Living

Independent, personal and confidential. Our exclusive buying agency finds and secures properties for private individuals, corporate clients and property investors.

As professional property search consultants we work hard to understand what our clients want to achieve from their property investment.

We will find you the perfect home whilst relieving you of the day-to-day frustrations and time-consuming problems associated with house hunting overseas.

Years of property search experience and market knowledge in Cape Town are channelled into satisfying individual requirements in terms of location, price, architecture and internal configuration.

We have the expertise and contacts to source those elusive, very special residential properties that often never appear on the open market.

In addition, our knowledge of the market means that we can ensure that you purchase your new home for the best possible price, and we will guide you through the conveyancing process here in South Africa until the property becomes legally yours, representing your interests every step of the way.

http://spacesa.com/contact.php

https://en.wikipedia.org/wiki/Constantia,_Cape_Town

 

 

Signs of Renewed Interest in South Africa Housing Market

Posted on: April 17th, 2018

Cape Town South Africa Housing- Due to improved sentiment about South Africa, it would not be surprising to see an increasing demand for SA residential property among foreigners and SA expats, according to John Loos, household and property sector strategist at First National Bank. http://spacesa.com/buy-property-in-cape-town.php

 This is despite demand levels for South Africa housing from foreigners and SA expats being down significantly compared to 2015 and 2016, according to the FNB Estate Agent Survey for the first quarter of this year.
Estate agents surveyed estimated that 4.3% of total home buying for the two quarters up to and including the first quarter of 2018 was by foreigners.The survey estimated that the percentage of South Africa housing being bought by SA expats was 1.51% of homes in the first quarter of 2018, after declining since 2015.
The South Africa Housing survey also indicated that the number of buyers from other parts of Africa purchasing residential property in SA has slowed faster than overall foreigner home buying here in recent years. For Loos this could arguably reflect tougher African economic conditions compared to those in more developed countries in recent years.
The estate agents’ estimates about a weakening demand among foreigners and SA expats throughout 2017 reflected “dampened investor sentiment” towards SA in general, according to Loos.In his view, this was likely caused by the stagnation of SA’s economy over a number of years, uncertainty about the SA government’s future economic policy, and “negative news” about the country such as sovereign rating downgrades to “junk status”.”
However, we have started 2018 with a noticeably more positive mood in South Africa, partly due to the political leadership change in the country following the ruling party’s elective conference in December 2017,” said Loos.Positivity has also been reflected in a stronger rand and a rise in the RMB-BER Business Confidence Index in the first quarter of 2018.”We will wait for further quarterly surveys before concluding that foreigner and expat buying levels are picking up meaningfully or not,” said Loos. http://spacesa.com/buy-property-in-cape-town.php

The 10 Most Expensive Streets For Property in Cape Town South Africa

Posted on: April 10th, 2018

Property in Cape Town is home to the country’s ten most expensive streets, where you will pay an average of R84,200 per square metre, a new report by AfrAsia Bank and New World Wealth found. http://spacesa.com/buy-property-in-cape-town.php

The South Africa Wealth Report, released on Thursday, found that these streets far outperform the rest of the country when it comes to property prices.

The most expensive street outside Cape Town is in Plettenberg Bay where you’d pay an average of R43,000 per square metre – R52,000 less than Cape Town’s most expensive street.

These are the most expensive streets for property in Cape Town and the whole of South Africa, according to the report.

http://spacesa.com/case-studies_gt20_index.php

The Ridge & Cliff Road – Clifton, Cape Town

Average cost per square metre: R95,000

This four bedroom house at the Ridge in Clifton is to rent for R221,000 per month. (supplied: Property24)

Victoria Road – Clifton and Bantry Bay, Cape Town

Average cost per square metre: R92 000

This one bedroom apartment is for sale for R13,900,000 along Victoria Road in Clifton (supplied: Property24)

Dock Road – V&A Marina, Cape Town

Average cost per square metre: R90 000

A one bedroom apartment is on the market for R9,405,000 along Dock Road, V&A Waterfront. (supplied: Property24)

Nettleton Road – Clifton, Cape Town

Average cost per square metre: R87 000

This six bedroom house along Nettleton Road, on a 3 812 m² erf, is on the market for R200 million. (supplied: Property24)

Clifton Road – Clifton, Cape Town

Average cost per square metre: R85,000

A four bedroom house for Sale along Clifton Road for R49 million. (supplied: Property24)

Kloof Road – Clifton and Bantry Bay, Cape Town

Average cost per square metre: R84,000

This five bedroom home is on the market for R150 million in Clifton. (supplied: Property24)

Ave St Leon – Bantry Bay, Cape Town

Average cost per square metre: R80,000

This six bedroom home is for sale for R90 million in Bantry Bay. (supplied: Property24)

De Wet Road – Bantry Bay, Cape Town

Average cost per square metre: R78 000

A six bedroom house is for sale for R85 million in Bantry Bay. (supplied: Property24)

Ave Marina – Bantry Bay, Cape Town

Average cost per square metre: R76,000

This five bedroom home is on the market for R59 million in Bantry Bay. (supplied: Property24)


Ocean View Drive – Bantry Bay, Cape Town

Average cost per square metre: R75,000

A four bedroom house on the market for R59 million in Bantry Bay. (supplied: Property24)

If you are looking to purchase property in Cape Town consider using a buyers agent such as Space Homesearch, we represent the buyer sourcing the finest property in Cape Town negotiating the highest discounts. Remember Estate Agents are not independent and their sole objective is to get the highest price for their clients property.   http://spacesa.com/index.php

Camps Bay Property International Appeal

Posted on: February 20th, 2018

Camps Bay the suburb with the highest property foreign buyer count in South Africa. Camps Bay Property.

http://spacesa.com/index.php

It’s no surprise that this suburb on Cape Town’s Atlantic Seaboard draws people from around the world looking for superb property, pristine beaches, luxury hotels and top restaurants catering for a world of tastes.

camps bay property

The property landscape in Camps Bay suggests that foreign buyers are largely in the market for a seaside second home but the area also has ‘swallows’, part-time expats and retirees who choose this location for its undeniable lifestyle allure.

Foreign buyer data for Camps Bay Property via PropStats indicates that in 2016 there were 67 sales, 32.8% of which were foreign buyers, predominantly from the UK. In 2017, to date, there have been 40 sales, of which 25% were foreign buyers from no dominant destination.

camps bay property

The scene in the Camps Bay property market is showing no signs of slowing down, which means this area will most likely retain its global appeal, as a prime property destination for luxury lifestyle connoisseurs.

As property buyers we have noticed over the years that a lot of the real estate in Camps Bay tends to be overpriced so you need to careful to study the market and look at the previous history of sales, also as a buyer you need to be aware of the strong south easter wind that hits the area in the summer months. Sheltered areas need to be a serious consideration when it comes to choosing the right location to buy in Camps Bay.

http://spacesa.com/buy-property-in-cape-town.php

camps bay property

http://www.campsbayinfo.com/

Cape Town Property Sales Drying Up = Buyers Market

Posted on: February 7th, 2018

A year ago, there seemed to be no end to Cape Town’s ever-rising tide of house prices. Trophy properties in posh Atlantic seaboard suburbs and the V&A Waterfront were reaching dizzy heights of up to R200,000/m². A price tag of R100m or more was no longer unusual in the likes of Bantry Bay, Fresnaye, Camps Bay and Clifton. Upcountry buyers were flocking in droves to the Western Cape — at an average relocation rate of 10 families a day, according to Wesgro figures. But are Cape Town property sales drying up and does this make it a buyers market. http://spacesa.com/buy-property-in-cape-town.phpCape Town Property Sales

The search for a more relaxed lifestyle in scenic surrounds, backed by a general perception that the city is far better governed, under the DA, than other metros, fuelled a boom that made house prices in many sought-after areas of Cape Town double over the past five years. A strong increase in foreign tourist arrivals further supported cape town property sales demand in these areas — so much so that in 2016 a German couple was happy to fork out a staggering R290m for a Bantry Bay mansion. The sale set a new record for SA house prices.

However, Cape Town’s housing party appears to have come to a halt now that the reality of the water crisis has set in and Day Zero looms ever closer. The City of Cape Town last week warned that if water consumption did not drop dramatically, municipal water supply to households would be turned off on April 12. Some commentators say Day Zero could arrive as early as March 3, given the severity of the drought.

Splurging R30m on a swanky Camps Bay or Clifton abode no doubt loses some of its allure with the realisation that taking a hot shower and a refreshing dip in a sparkling clean swimming pool or running your washing machine and dishwasher may all soon become a thing of the past. Of course, it’s not only the crisis that has put a lid on Cape Town’s property boom. Affordability issues also play a role. FNB property strategist John Loos says semi-gration to the Western Cape is no doubt losing momentum on the back of the widening gap in house prices between Cape Town and other SA cities. “New entrants are simply being priced out of the market,” says Loos. Cape Town Property Sales

Moreover, the image of the DA-run local and provincial government has been tarnished in recent weeks following the poor handling of the water crisis and internal wrangling among DA members have affected cape town property sales.

Industry players confirm that sales have already slowed markedly in upper-end suburbs, particularly on the Atlantic seaboard, the premier playground for the uber rich and arguably the city’s most popular second-home destination. Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says sales volumes across Cape Town’s top-end suburbs are down around 30% year on year.

As a result, prices have already dropped in some suburbs and cape town property sales have slowed. Geffen refers to Lightstone Property’s latest figures, which show that in Fresnaye average house prices are down 1.76% in the three months ending November — from a 12-month average of R15.21m to R14.94m. Bantry Bay took a bigger knock, with the average sales price of R12.95m in the three months ending November being 15.9% lower than the annual average of R15.47m. In Sea Point and neighbouring Greenpoint, average prices dipped by 7.89% and 3.26% respectively over the same period — from R7.29m to R6.72m and from R7.29m to R7.05m. Geffen argues that it’s not the water crisis alone that is to blame for a turn in market sentiment but rather SA’s overall recessionary climate and low investor confidence.

Cape Town Property SalesThe time it takes to sell a house has also increased noticeably in some Atlantic seaboard areas. For instance, Seeff reports that it now takes around six months on average to find a buyer for a house in Camps Bay, up from around four months a year ago

Some properties are selling for as much as 20% below asking price,” says Seeff Atlantic seaboard agent Pola Jocum. She says sellers will have to become more realistic in their asking prices and stop using overpriced listings to guide their price expectations.

The only area in Cape Town where the taps are likely to remain on once Day Zero arrives is Cape Town’s inner city. Reddy says water supply to the CBD won’t be interrupted as it’s a key priority to keep economic activity intact in what is Cape Town’s main business hub. This is likely to provide a substantial boost to inner-city apartment sales, though local government still needs to map out the exact area where the taps will be kept open.

Basil Moraitis, Pam Golding Properties area manager for the Atlantic seaboard, says the company is already seeing more interest in CBD apartments. There is a rising trend of owners of larger stand-alone homes with pools and gardens opting for sectional title living, given the lower water consumption and maintenance requirements.

While some estate agents believe the drought-induced dip in Cape Town’s status as SA’s prime property and tourist destination may be shortlived, the Mother City may well face a prolonged period of stagnation with cape town property sales and growth.

Richard Day, Pam Golding Properties Cape regional head, says: “It’s too soon to say whether the water crisis will materially affect the desirability of Cape Town as a tourist destination or buyers’ decisions to relocate to the Mother City. It will depend on its effect on the local economy and social structures, and also the severity and duration of the crisis.”

http://spacesa.com/index.php

http://www.bizcommunity.com/Article/196/568/173006.html

 

 

 

 

Cape Town Property and the Water Crisis

Posted on: January 29th, 2018

Cape town property market :Capetonians are bracing for the onset of Day Zero – the day the City turns off the taps and residents will have to collect their 25-litre water ration at one of 200 public distribution points. Should this day arrive, the social and economic impact is predicted to be catastrophic. Could it also be the final straw that breaks the back of Cape Town’s particularly buoyant property market?

So far, we’ve seen little evidence of the water crisis affecting Cape Town property. Buyers are certainly more water-aware, and looking for homes that offer greater water security, but they haven’t been deterred from investing in our city as yet. While the market remains strong for now, it would be naïve to assume things will continue as normal come Day Zero. The situation, however, will not be as dire as many predict.

Different areas of the cape town property market will be affected in different ways, largely due to the different effects the crisis will have on the province’s various demographics. If we take the middle- to upper-end of the market, for example, I do think sales will start to slow. Semigration – a huge driving factor in this segment over the last few years – is unlikely to continue at the same rate until we resolve our water situation. That means we’re not going to have as many affluent Joburgers and Durbanites driving demand for luxury property, and prices could take a slight knock in the short term.

While existing owners are unlikely to be thrilled at that possibility, it could actually have a valuable normalising effect on this end of the market. We’ve seen double-figure capitalisation in Western Cape property over the last two years, and that kind of growth isn’t typically sustainable. Left unchecked, there’s a risk that property values would lose touch with their underlying economic fundamentals, and we’d end up in a bubble situation – something we definitely want to avoid.

Higher prices for first-time buyers

Entry-level properties may not see the same normalisation effect as their more expensive counterparts, however. In fact, first-time buyers in the Western Cape may face even higher prices thanks to the water crisis. There are two main factors that could affect the entry-level property market. The first is the likely influx of people that we’re going to see coming to Cape Town to look for work as our outlying rural and agricultural areas take strain. That movement would increase the need for affordable rentals, and could trigger increased demand for entry-level homes from buy-to-let investors.

 

The second factor is the effect the lack of water will have on construction. Far fewer developments are going to be approved by the municipality, which cuts down on the amount of new stock hitting the market. That could increase demand for existing entry-level units and push up prices. Of course, prices mean very little if no-one is buying property. Do Capetonians really have enough confidence in their city to continue making long-term investments?

South Africans are nothing if not resilient, and I think most Capetonians are very positive about sticking it out and making it through this crisis.

Affordability could be an issue in the short term, and we could see more activity from investors than homeowners in some parts of the market. In general, however, I think the positive political changes that we’ve seen on the national stage will do a lot to bolster consumer confidence, and if we can get through Day Zero, Cape Town’s property market will be just fine.

Printed Biz Community Jan 26th 2018

Cape Town Property Market Predictions for 2018

Posted on: January 15th, 2018

Cape Town Property Market : All in all, 2017 was a bad year for South Africa. As if credit rating downgrades, a lack of economic growth, growing reports of state capture, and soaring fuel and food prices weren’t enough, we also had to contend with a president who seemingly reshuffled his cabinet on a whim, removing respected ministers and replacing them with people with little or no experience in the key positions to which they had been appointed. The rand was severely affected by all this and as investor confidence dipped, so did the value of the currency.

The news that Cyril Ramaphosa had been elected president of the ANC was well received by the markets and the rand strengthened almost immediately. We are not out of the woods just yet, although rating agency Moody’s noted that Ramaphosa’s election opened up a tentative possibility of a ‘credit positive’ shift in SA policy and an increase in business confidence. Fitch on the other hand stated that although the full repercussions of Ramaphosa’s victory will be far-reaching, they are likely to remain unpredictable ahead of the 2019 elections.

We have collated some recent comments by leading real estate people in South Africa, here are a few snippets. Overall the summary is that 2018 will be a buyers market in the Cape Town Property Market.

cape town property market

Market Commentators Predictions for the Cape Town Property Market:

“Global financial markets have responded positively to Ramaphosa’s election, with the rand in particular rallying strongly, thereby reducing pressure on the Reserve Bank to raise interest rates. If the new ANC president is able to deliver on the market’s perceptions of a shift in SA’s political and hence economic fortunes, there is likely to be considerable pent-up demand for property – as both business and consumer confidence is likely to rebound strongly from current subdued levels.”

“When it comes to buoyancy in the property market, confidence is a major driver. The drop in the petrol price bodes well, and there’s encouraging talk about an interest rate cut…all clear confidence boosters. If the banks ease up on their stringent lending conditions this year, this will further stimulate the lower end of the market, and if stock levels subside at the higher end, we’ll see growth”

cape town property market

“Whereas it was a sellers’ market until early 2016, we saw a progressive shift in 2017 which manifested in lower demand, rising stock levels combined with a decline in buyer confidence, flat price growth and deals taking longer to conclude. The outcome is that we head into 2018 with a buyers market for most areas, even some Cape locations.“Even the stand-out Cape Town is beginning to slow down although it continues to benefit from a broad base of demand such as the constant flow of semi-grating buyers from other areas, investment and holiday demand”

“Fuelled by real demand, we predict that Cape Town will continue to see positive house price growth in 2018. While the very steep upward curve we are currently seeing may flatten marginally, Cape Town will remain a lucrative investment destination from both a capital growth and rental income perspective as the current growth is not a bubble”

cape town property market

http://spacesa.com/index.php

https://www.privateproperty.co.za/advice/news/articles/south-african-property-market-predictions-for-2018/6140