The market for residential property in the Cape Town metropolitan area is holding its own, and property agents are expecting a busy final quarter as they enter the summer season – traditionally the most active time of year for residential sales in the Cape. Pam Golding Properties (PGP) reports that stock levels are beginning to rise in many areas, coupled with fresh activity in the developments market.
PGP’s MD for the Western Cape metro area, Laurie Wener, says there is still enormous demand for family homes across all areas of the city, particularly in the price ranges from R3.5 million to R8 million. “First time buyer activity is quite brisk in some areas,” she says, “ particularly in suburbs along the Western Seaboard, where one can still obtain an apartment for under R800 000 and a family home for under R1.5 million. While top end sales activity has been moderate, PGP has concluded several substantial deals in the past quarter (July to September 2013), including a R23.5 million home in Constantia, sold to a UK buyer, and a R26.5 million apartment in Clifton, sold to a buyer from Western Africa. There are also increasing signs of fresh activity in the residential developments market, with a number of developers indicating that they are eager to re-enter the market, with projects in various price categories.”
“The sectional title market on the Atlantic Seaboard, in the City Bowl and in the Southern Suburbs is seeing a flurry of activity,” Wener continues, “with high demand coupled with shortage of stock. This situation has boosted prices by around 20 percent over the last nine to twelve months. There are also indications that banks are beginning to take a broader view towards mortgage finance.”
Property finance consultant with South Africa’s biggest bond originator ooba, Yvonne Viljoen, agrees that banks appear to be easing their lending criteria: “There are a number of indicators that demonstrate the banks’ improved appetite for extending credit for home loans. These include lower average deposit requirements, which are down by 21.2 percent, year on year, as well as a slightly lower Initial Decline Ratio, which is the proportion of bond applications that are rejected by the first lender applied to. That figure dropped 1.2 percent between August and September (2013), to 47.2 percent. But of those 47 percent, more than a quarter (28.9 percent) were successful on application to an alternative institution.” (National figures for whole of South Africa)
Viljoen adds that banks are currently requiring up to 20 percent as deposits, depending on the client’s individual risk profile and the purchase price. “The average deposit paid by ooba’s successful home loan applicants in September 2013 was 14.1 percent of the purchase price,” she says. “That’s down from close to 17.9 percent in September 2012.”
Viljoen and Wener are both confident of moderate price growth in the property market during the final quarter of 2013, and into 2014.
For more information, contact PGP’s MD for the Western Cape metro area, Laurie Wener, on 021 673 4200 or firstname.lastname@example.org.
**All prices quoted are actual selling prices, and all sales mentioned were concluded by Pam Golding Properties, unless otherwise specified.