Lack of stock and the drought put buyers off in early 2018, but now that the water crisis has abated, there are good opportunities in the Cape's property market once again.
“At the close of 2017 most of our offices and agents were experiencing a continual high demand for homes across all price segments, but had sold most of their choice properties, often at record prices due to the scarcity of stock,” says Harold Kolnik, principal of Jawitz Properties South Peninsula.
The lack of stock continued into the early months of 2018. At the same time the on-going drought began to put buyers off. “However now, in mid 2018 our stock levels have been nicely replenished and the good rains are busy filling our dams,” Kolnik says.
As of today, 27 July 2018, Cape Town’s dams were 56.5% full which translates to approximately two years of water availability at current usage levels. The water crisis also had a major impact on tourism resulting in low holiday rental occupancy levels. “Many of our normal visitors, however, are still unaware that the Cape is once more back in shape.”
However, this has created good opportunities for buyers still wanting to “semigrate” to the Cape. It has also added a lot of new rental units to the long term rental market that was also experiencing record scarcity. The added rental availability should impact the rental market and added competition could lead to more negotiable landlords wanting stable and good tenants.
“But the message that our water crisis is improving is taking too long to get out to tourists and property buyers alike,” Kolnik says.
He says that Cape Town will never again be as dependent on the dams in and around Cape Town for water as it used to be. The City of Cape Town has started to implement new measures that will reduce the city’s dependence on rain fall. These include aquifers, desalinations plants, alien vegetation eradication and more.
In addition, the people of Cape Town have really bought into water-saving measures and this behaviour has become a new way of life, says Kolnik. Many homeowners have invested in boreholes and well-points and are harvesting rain water into tanks and recycling grey water. “The challenge Cape Town faced is proving to be a blessing in disguise and is setting a positive and very necessary example for future generations.” With the exception of a very small percentage of the world’s population who have future water security, water in the future will become one of the world’s scarcest and most valuable resources.
Foreign buyers still keen
Interestingly, foreign buyers have continued to be active in the market. Property market data and analytics provider Lightstone Property recently released a report stating that the drought was not deterring foreign buyers from looking at purchasing opportunities in the province. “There has been a steady increase in foreign sales over the last five years and currently just over 7% of total sales have come from foreign buyers,” the report said.