This is a typical example of the spacious, characterful Victorian homes found in Observatory and, to a lesser extent, in Woodstock. This four bedroom home in Observatory recently sold for R1,75 million.
The stock shortage difficulties now being encountered by many Cape Town estate agents – particularly those in the more popular Southern Suburbs – have been very much in evidence for most of last year in his territory, says Craig Gilfillan, the Rawson Property Group’s franchisee for Observatory, who also operates in Woodstock and Pinelands.
There has, says Gilfillan, been a slight increase in homes for sale just recently, which he attributes to the onset of summer and to the expiry of many leases which often run on a year-to-year basis, but stock acquisition has become and will remain the big challenge facing any go-getter estate agency.
As almost always happens when stock is in short supply, price rises have peaked at two or three times their previous rates. Gilfillan estimates that on the homes he and his team sold last year the average year-on-year value increase has been no less than 15 to 20% – with slightly less spectacular rises at the top end of the area’s price scale (for the record, the price range here is from R1,2 million to just under R4 million, with sectional title units comprising only 15% of the total). In Upper Woodstock the prices are slightly higher and in Lower Woodstock they are now rapidly moving up towards these levels.
As an example of the very fast price increases some have achieved, Gilfillan mentioned one three bedroom home which sold quite recently for R2,4 million. This same home sold last year for R1,7 million. When homes do come up for sale, say the Rawson Observatory team, they are usually signed for in under two weeks.
“Value increases of the size we have been seeing,” says Gilfillan, “should, however, not deter those who have the resources to buy here and who are prepared to wait patiently for opportunities. As I see it, the bubble will not burst so long as the stock shortages continue – and I can see no single factor which can change that situation.”
A radical increase in the interest rates, says Gilfillan, could slow down sales but it is not believed this is likely to happen this year.
Those who are unable to buy here – for whatever reason, says Gilfillan, tend not to look elsewhere but to rent. In this sector, too, the demand, bolstered by a large student population, has become so strong that landlords have been able to push up rentals by ± 15% in one year. Two bedroom homes in Observatory now rent at R8,000 plus per month and three bedroom homes at R12,000 per month. This Rawson franchise has capitalised on the situation as best it can and now manages over 100 properties, but, they say, they could find tenants for many more homes if the stock was available.
Surprisingly, however, says Gilfillan, considering the big rentals now obtainable, relatively few of Rawson Observatory’s buyers are as yet buy-to-let investors.
So why do Observatory and Woodstock continue to attract so many would-be residents?
This topic has been repeatedly discussed in the property media, but there is in fact no mystery about it, says Gilfillan. He identified four main reasons for the ongoing demand. These are:
The closeness of the area to the city centre, many Capetonians these days no longer being prepared to waste time in commuter traffic jams or with lengthy public transport rides
The attractive bohemian/cosmopolitan appeal of the area and its high number of restaurants, bars, bistros and coffee shops – no less than eight, for example, in Lower Main Road where this Rawson Property Group has its office
The closeness to UCT and Groote Schuur Hospital. While a high proportion of tenants at Observatory/Woodstock are students, among those actually buying and living here, many are UCT and Groote Schuur staff and they, in turn, tend to attract other professionals to the area
The undeniable impact of the buildings here, a large number of which are Victorian (built between 1890 to 1920). They have, says Gilfillan, been almost always well maintained and upgraded and are, therefore, very comfortable and convenient to live in.
“Taking all the above factors together,” says Gilfillan, “it is quite obvious that these areas will continue to attract many residents and enhance their reputation as being among the Cape suburbs in which upwardly mobile people want to live.”