The residential property market fluctuates between a buyer’s market, where supply outweighs demand, and a seller’s market, where demand exceeds supply. Economic, political, and local factors can quickly shift sentiment.
Cape Town is a prime example. Beyond its natural beauty, it is widely regarded as one of the best-run cities in South Africa. Strong infrastructure, a diverse economy, and employment opportunities have attracted both digital nomads and semigrants.
Wesley Cowan, Managing Director of Galetti Auction Cape Town, says the city’s high demand and low housing stock are fuelling the auction market. “Cape Town stock levels are reportedly down by 30–40%, which creates the ideal opportunity for South Africa to take a page from leading global auction markets like Australia.”
Cowan highlights the principle that scarcity drives demand, making auctions an effective way to unlock market value. “Australia is the benchmark,” he notes. “The majority of properties in world-class cities like Sydney and Melbourne are sold via auction.”
In Cape Town, property values continue to rise year-on-year, with both local and international buyers following the same principles seen in global markets. “Buyers are willing to compete for unique homes in Cape Town, and auction is the ideal method to drive up prices—and demand—through competitive bidding.”
Cape Town’s scarcity mirrors Sydney’s. With land physically constrained by mountains and the ocean, suburbs such as the Atlantic Seaboard, City Bowl, and Southern Suburbs remain in permanent short supply.
Cowan concludes: “It’s important to remember that you aren’t after the first offer, but the highest offer. With trusted providers, auctions are becoming the ideal solution in the current market.”
“As Cape Town continues to face growing demand and limited housing stock, auctions present a timely and strategic alternative to traditional sales methods. With the global success of Sydney offering a clear blueprint, South Africa has a valuable opportunity to redefine how property is bought and sold.”
Five benefits of auctions for sellers
- Quick sale, especially if an insolvent estate
- Transparent negotiations
- Cash-ready buyers
- Fair market price
- Less time on the market reduces carrying costs
Five benefits of auctions for buyers
- Potential for a good deal or bargain
- Access to multiple properties
- The sale is binding
- No lengthy negotiations
- Transparent pricing, with the highest bid determining the final price
Five risks of property auctions
- Property is sold ‘as-is’ (Voetstoots)
- Property may be sold with tenants in occupation
- Inheriting outstanding taxes and creditor obligations
- No or limited recourse after the sale
- Bidding wars can push prices above market value
Five strategies to consider
- Conduct in-person inspections before the auction
- Secure financing in advance
- Do thorough due diligence on the property history, condition, and local market value
- Budget for repairs or renovations
- Consult with property lawyers, surveyors, and professionals
Five tips for participating in an auction
- Pre-register online if possible
- Ensure your FICA documentation is in order
- Be ready to attend in person, online (know your online auctions), or by telephone
- Confirm you can meet the reserve price
- Research previous auctions to familiarise yourself with the process
Five key terms used in auctions
- Sale in execution: A property sold by the sheriff’s office to recover debt
- Reserve price: The minimum selling price the seller will accept
- Property in possession: A repossessed property held by a bank to recover debt
- Bidder’s card: A registration card entitling you to place bids
- Voluntary auction: A sale where the owner chooses auction over traditional marketing
