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PROPERTY: Some Areas Hold Their Own

 



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It is undeniable that there has been a downward trend in the property market and a reduction in transaction volumes, resulting in downward pressure on prices.  But, says Pam Golding Properties’ MD for the Western Cape metro region, Laurie Wener, it’s not all doom and gloom.  She points out that certain suburbs as well as specific types of homes are bucking the trend, and continuing to attract high levels of demand and even top prices.  

Says Wener:  “A handful of top-end properties which are iconic or individualistic in terms of design, position and finishes, sometimes defy market trends, as they can only be acquired at a price acceptable to the seller.  These sellers are often prepared to wait for the right price, or especially for a cash buyer.  This trend generally occurs in upmarket areas such as Clifton, Bantry Bay, Camps Bay, Upper Constantia and Bishopscourt.  For example, PGP recently set a record price in Bantry Bay for the most expensive house ever sold there – R36.54 million – and has closed several other sales in excess of R20 million over the past few months.”

“Although it was a quieter December than usual for property agents all over the country,” continues Wener, “at PGP Western Cape our figures showed a healthy upswing into January, with more sales, more interest from potential buyers, and better attendance of show-houses.  There has also been significant improvement in the lower-priced segments which were initially hardest hit when the market started cooling, but are now picking up noticeably.  This is especially true at present of the lower-end price ranges in the Atlantic Seaboard and Southern Suburbs (up to R2 million, and particularly in sectional title sales) and in the Northern Suburbs (residential sales up to R3 million).”

Wener adds that the situation varies quite substantially from area to area.  “There is no denying that some areas have been hard hit by the downturn,” she says, “particularly those like Parklands and parts of the Northern Suburbs where buyers typically have high mortgages relative to value.  The drop in market values is resulting in negative equity in property for some of these owners.  However, areas like the City Bowl, where there has historically always been a chronic shortage of single residential stock, are coming off relatively unscathed.  PGP’s residential sales team sold eight homes in eight weeks in the City Bowl during December 2008/January 2009, with an average variance of just 11.2 percent between the asking and selling prices.  This is a good indication that our agents counselled the sellers correctly in terms of pricing, and also demonstrates that prime locations remain in high demand despite the bearish market.”

Wener says whilst there is a steady demand for houses, the sectional title market in the Central City has been less resilient.  In areas where there has been high investor activity over the past 18 months or so, owners may now find it difficult to recover their costs in the current market.  “As there is currently a very robust rental market in the Central City, the result is that better returns are achievable than there have been in years,” she says.  “Therefore our advice to investors/owners would be that if it is at all financially feasible for them, they should try to hold onto their properties and rent them out until the market recovers, rather than sell now at a loss. The market will recover and they will see capital growth again.”

Cash buyers remain at a significant advantage in the current market, adds Wener, as banks continue to tighten their lending conditions even further.  “Whilst the latest reduction in interest rates announced on 5 February is a welcome step for home-owners,” she says, “the ongoing conservative approach being taken by banks towards their loan criteria and reduced mortgage loan budgets will dilute its positive effects to some degree.”


 
 
 
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