Any survey of the residential property trends in Cape Town’s Bergvliet/Meadowridge area will, says John Weston, the Rawson Property Group’s franchisee for this precinct, reveal that in a relatively short space of time (± 15 years) Bergvliet and Meadowridge have metamorphosed into being two of the most highly sought after residential districts in Greater Cape Town.
“This area,” says Weston, “was in the late 1990s regarded as almost ‘peripheral’ and therefore affordable. To many people it seemed to lack the glamour of such suburbs as Upper Kenilworth, Upper Claremont and Newlands.”
“From about 2001 onwards all that changed: suddenly everyone, or so it seemed, wanted to live here because, as is still the case today, there was a new realization that the area has excellent schools, very attractive parks and open areas, good shopping centres, larger than usual erven (usually 780 m2 to 950 m2) and an extremely convenient central Cape Peninsula position”.
“Then in 2007, as a result of the National Credit Act stipulations which overnight eliminated some 35% of bond applicants, there was a temporary slowdown. In the last two years, however, a situation has prevailed in which estate agents like myself may well find themselves dealing with as many as 30 enquiries from home hunters on the first day that a property goes onto market.”
A significant percentage of these, adds Weston, are from up country and are planning to move here.
The almost incredibly strong demand, says Weston, has resulted in annual increases of on average 15% plus on most home values over the last three years. For example, a certain client, wanting to use his home as surety, was three years ago given a bank valuation on it of R1,8 million. Recently the home was revalued by the same bank at R3 million. Today, says Weston, freehold homes in the area (which has very limited sectional title units) are priced from R2,5 million to R5 million and there is little prospect of these price rises slowing down in the near future.
From an estate agent’s viewpoint, boom conditions of this type are not altogether good news, says Weston, because current owners are far less likely to sell, often staying on in their properties for 10 to 15 years as they know only too well that whatever they receive for their home here they will probably be charged equally high prices elsewhere if they move to ‘improve their position’. They also, he says, are deterred from property transactions by the knowledge that today’s transfer costs and duties along with bond registration costs usually add 7 to 8% to the total purchase price.
This makes selling and buying at this level an expensive process.
The boom and the stock shortages, says Weston, have also resulted in certain estate agents once again reverting to the common practice of overvaluing properties in order to secure mandates. When this happens, he says, ‘almost inevitably’ two months down the line the property becomes stale and is sold for a reduced value which obviously disappoints the client.
“Overpriced homes very often do not sell these days, even when buyers are keen, as they have access to numerous property websites and know how to find comparative prices for the areas in which they are interested,” says Weston.
His message therefore is “if you can possibly manage it, buy now and benefit from the price escalations likely to be seen in the next few years”. Currently, he says, estate agents in the area are only selling between six and eight houses per month combined and even at today’s prices, these new purchases will prove to be an excellent investment.