PROPERTY: Cash is King As Buyers Compete Amidst Shortage Of Homes in Top Cape Areas
Recent Western Cape Business News
With homes now literally selling within days of coming onto the market, it seems that it is cash that is king in ruling the roost when it comes to buyers contending for what has become a rather scarce pool of property in the Cape’s hot spot areas.
That is the word from Samuel Seeff, chairman of the Seeff group who says that according to data from Propstats, the Cape metro attracted some R10.3 billion in cash deals for the year covering July 2014 to the end June this year. This equates to almost 60% of the total value generated across the Cape metro.
The hot spot areas where cash buyers are most prevalent include the Atlantic Seaboard, City Bowl and Southern Suburbs along with areas such as Hout Bay, False Bay and Blouberg that have all seen more cash buyers in recent years.
The Atlantic Seaboard is of course in a league of its own when it comes to the high volume of cash buyers and Ian Slot, Seeff’s managing director for the area, says that over 70% of all transactions over the past year have been cash deals. This translates to a hard cash investment of just over R3.97 billion of the total value of almost R5.122 billion in real estate sales over the last year.
Sales in the R20 million-plus trophy home sector amount to an even more impressive 80% of the almost R2 billion in value generated across the Atlantic Seaboard, says Slot. Most of these were local Cape buyers who invested some R830 million (about 28 of the 38 trophy homes sold) into the area with cash sales ranging to R42.5 million for a Bantry Bay cliff-side apartment, sold by Seeff.
In the City Bowl, just over half of the deals concluded over the last year were cash sales, says Slot. This translates to about 402 of the 753-odd units sold, just over R1.2 billion of the total of around R2.03 billion in sales generated across the area.
Stand out areas include the V and A Waterfront that has seen a significant rally in sales over the last two years with some 84% of all deals concluded for full cash including a Pembroke apartment sold by Seeff for R22.75 million to a Capetonian cash buyer.
Over the same period, almost 70% of all deals in Camps Bay and even Sea Point were cash transactions, says Slot. In Clifton, basically all of the deals over the last year were for full cash ranging to R100 million for a home recently sold by Seeff. In Bantry Bay and Fresnaye, over 80% of all transactions were cash deals.
In the Southern Suburbs, inclusive of the Constantiaberg area, the cash trend too is particularly evident at the top end of the market, says James Lewis, managing director for the area. Full cash transactions account for about 47%, or 763 of 1639 units sold over the last year. This means a cash investment into bricks and mortar in the area of almost R2.955 billion of the total value of sales of just over R5.66 billion.
Here too, says Lewis, the top R20 million-end has seen more sales and resulting cash coming into the market over the last year. All, but two of the twelve sales worth R363.7 million were cash transactions, about 60% of which were local Capetonian buyers.
On the other side of the peninsula, more than half of the 300-odd units worth just over R1 billion sold in Hout Bay were to cash buyers, adds Lewis. Here too, it has been mostly local Capetonian buyers investing their cash into property in the village.
On the False Bay peninsula, just over 60%, or 279 of the 455-odd sales were cash deals according to Gary Grobbelaar, chief executive officer for Seeff’s operations in the area. This translated to almost R630 million in hard cash invested into the market here. This, he adds, has been largely driven by rising prices in other areas of the peninsula attracting downscaling cash and out of town buyers to the area.
On the western side of the city, the greater Blouberg area too has seen an increase in cash invested into property in the area according to Clinton Martle, managing executive for the area. Some 629 of the around 1679 deals concluded across the region over the last year were cash transactions. This accounts for just under 40% of all deals.
On the whole it certainly says something for the confidence that buyers have in the Cape property market if they are prepared to invest hard cash in bricks and mortar here, says Seeff. These cash-rich areas are also seeing a less than 7% difference on average between the asking and selling prices.
On the Atlantic Seaboard, the current price gap (average difference between the asking and selling prices) for the last year now stands at around 7.9% and at 5.9% in the City Bowl, both areas that are still seeing significant stock shortages.
For the Southern Suburbs, Hout Bay and False Bay areas, the price gap is at 7%-9%, but in the Blouberg area it is now just 4.5% on average, says Seeff.
The key advantage of buying cash is that it propels you to the top of the list of competing buyers and puts you in a much stronger bargaining position. For the seller, it generally means a relatively quick deal as these transactions are usually not linked to a buyer having to first sell a property.
Our branches in these hot spots are sitting with waiting lists with up to 50%-70% cash and credit ready buyers just waiting for the next available listing. With the high selling season fast approaching, the time is right for those still looking to take advantage of the good selling conditions, concludes Seeff.
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