Atlantic Seaboard property market in price correction phase

Private Property South Africa
Press

After years of unprecedented growth the Atlantic Seaboard property market has slowed down, but it is not all doom and gloom say local agents.

After a four year high of unprecedented growth, South Africa’s strongest property market took a knock in 2017 with a significant drop in sales volumes and price growth and, although this year got off to a promising start with renewed investor interest, market activity on the Atlantic Seaboard is still subdued.

However, Brendan Miller, CEO of Lew Geffen Sotheby’s International Realty on the Atlantic Seaboard remains upbeat: “Although there have certainly been extenuating influential factors like the water crisis and political instability and the land expropriation issue certainly hasn’t stimulated the market, we mustn’t forget that the property industry always works in cycles.

“There are upswings and there are price correction phases and right now we are in the latter – it was inevitable, after such a growth period. And, as Cape Town’s growth was considerably higher than in other metros, our recovery is bound to be slower.

Miller is optimistic that the market will pick up again in the fourth quarter as it usually does and he says that despite the downturn, it hasn’t been all doom and gloom on the Atlantic Seaboard.

“The year got off to a promising start when an agent in our office brokered a record apartment sale price of R30 million as well as three sales within 24 hours of listing during the first quarter. During this [period we also saw the difference between asking and selling price drop from 5.8% in 2017 to 3.5%.

“Certain areas and sectors have also held their own well considering the market conditions – with consistent interest for realistically priced properties, especially at the lower end of the market.”

One of these areas is Mouille Point, a prime oceanfront suburb with a broad property spectrum ranging around R2m to designer trophy homes. Occasionally one can even still find studio apartments, often with sea views, for between R1.5 and R1.9m.

“We did see a dip in sales as well as the average apartment price in 2017,” says Geffen, “but this can largely be attributed to the top end of the market tapering off from Q3 when investors began to adopt a ‘wait-and-see’ attitude in the run-up to the December NEC conference.”

“However, demand for property in the entry and mid-markets has remained fairly consistent, with the majority being local buyers, often empty nesters downscaling once the kids have left home and established professionals who prefer the low maintenance lifestyle of apartment living.”

He adds that Mouille Point also appeals to investment buyers who are attracted by a strong rental market which consistently yields high returns for both long and short-term lets.

“The sectional title market has fared better than the housing market during the last 18 months,” says Miller, “and it’s also looking likely to bounce back quicker.

He attributes this largely to three key factors: accessible pricing, convenience and security.

“Convenience is one of the key reasons for the Sea Point beachfront’s resurgence as one of the most sought-after areas on the Atlantic Seaboard – an array of shops and restaurants are on their doorsteps and the promenade and beaches across the road are ideal for exercise and family leisure time.”

The rental market

The once-strident rental market also slowed down with far more available stock on the market than in 2016, but this is not only due to a sluggish economy, and often more to do with pricing.

“Prospective tenants are well that they now have many more options than in recent years and are therefore often unwilling to accept the advertised price while a significant number of landlords are not open to negotiation.”

Miller concludes: “There isn’t a shortage of buyers but rather a wait-and-see sentiment which should make way for renewed investor confidence after the elections next year, compounded by a price adjustment period.

“We are confident that the market will begin to rally within 12 months as it has already started to do in Johannesburg and Durban where there was lower growth to correct.”

Green Point property2 bedroom Green Point cottage on sale for R4.5m

Pictured above: A newly renovated modern two bedroomed cottage tucked away in Greenpoint in close proximity to the Waterfront, promenade and amenities. Open plan living areas flow onto an expansive sunny entertainment terrace. On the market for R4.5 million, it has a private pool, jacuzzi, utility room and garage. View this property here

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