While the residential market bounced back in 2021, there is a shortage of available stock in many of Cape Town’s suburbs, according to the Seeff Property Group
PHOTO: SUPPLIED, Jean van der Meulen, Stephan Louis
After initially struggling in 2020 and lagging behind other metros, the market bounced back in the 2021 to record highs and agents are now seeing a shortage of properties to sell and rent in many suburban areas across Cape Town.
Lightstone data shows that a record 37,432 transactions worth more than R69.9bn were recorded for 2021, well above the 2014-2015 boom transactions of about
34,000. More than 66% of transactions were for freehold property, predominantly in the suburban areas. The average transaction price for the Cape Metro stood at R1.8m in 2021 compared to R1.47m in 2015.
It currently stands at more than R2m which could be due to strong activity observed in the upper price bands this year, according to Samuel Seeff, chairman of the group. Across most of the suburbs, properties are still selling within 8 to 12 weeks on average depending on the price band. Correctly priced properties are not only selling faster, but achieving better prices, generally within about 5% to 7% of asking prices on average.
AFFORDABLE SUBURBS BELOW R2M CONTRIBUTED THE HIGHEST VOLUME IN SALES
The vast majority of sales across the Cape Metro over the past year fell below R2m with some 40% below R1.5m. According to Seeff Goodwood licensee Johann Groenewald, affordability remains a priority for most buyers. More people moving to areas such as Goodwood with having the means to purchase a home there is good demand, but unfortunately not enough well-priced properties to go around. In demand are neat, compact homes with good facilities, especially family homes with a flatlet in the R1.7m to R2m price range and two-bedroom apartments in the R700,000 to R1.2m range. While many are selling to downscale or retire, Groenewald says sellers are also looking to upgrade.
With the market slightly flatter, sellers must now focus on market-related asking prices or they could miss out. It takes six to eight weeks to sell, and sellers often have to settle for 5% to 10% less than their asking price. Overpriced properties simply do not sell. The rental market remains active, but upfront costs and deposits can be problematic in the lower income bracket. There is good demand for well-maintained properties. Three-bedroomed family homes achieve rental rates of R12,000 to R16,000 and two-bedroomed apartments around R7,000 to R9,500 per month.
BUYERS AND TENANTS FLOCKTO CAPE TOWN’S NORTHERN SUBURBS
Seeff Century City licensee Helga Clemo says 2021 was an excellent year for the market. Despite this year starting off slowly, demand is now strong with stock levels steadily declining. There are still plenty of first-time buyers looking for two-bedroomed apartments below R2m which tend to sell fast. There is also an equal demand in the high-end properties. The low stock levels means that properties which have been on the market for a while are now selling.
Many sellers are offloading their secondary properties. These are often tenanted which is a draw-back for buyers looking for own-use units. A concern is the tendency for sellers to “test” the market with high prices which holds up sales. If correctly priced, however, properties are selling quite quickly.
Beautiful surroundings, modernity, greenery and walkability in neighbourhoods is a big drawcard. Aside from locals, tenants are coming from Johannesburg and now
also Durban and there are often multiple applicants for a rental property. Century City is a strong market for rental investments. The highest demand is for unfurnished properties. One-bedroomed apartments rent out for about R11,000 per month, a two-bedroomed unit for R15,000 and a three-bedroomed apartment for R18,000.
CENTRALITY IS DRIVING DEMAND FOR SUBURBS SUCH AS PINELANDS AND THORNTON
Lightstone data shows that Pinelands and neighbouring Thornton enjoyed a near record year in 2021. Seeff Pinelands and Seeff Thornton sales manager Pauline Hareb says while there has been a reduction in buyers, there is still good demand and a shortage of stock. The central location and proximity to Cape Town’s CBD and Southern Suburbs are strong drawcards for the suburbs with a healthy sales and rentals market.
Both areas are popular with families. Pinelands is especially popular with professionals and is the only suburb with high earning buyers with two degrees on average. Lightstone’s data indicates, family houses with four bedrooms are most in demand in the R3m to R4m range. If priced correctly, these can sell in just over eight weeks and for within 5% of asking prices.
Overpriced properties often result in 10% below the asking prices. In Thornton, properties below R2.7m are selling quite quickly. The highest demand for rental houses is in the R15,000 to R20,000 per month range and for complexes and apartments about R7,000 to R9,000. High prices about the R20,000 per month range take much longer to find tenants.
