Cash is king in the southern suburbs where the majority of buyers don’t need bonds, say Lew Geffen Sotheby’s International Realty area specialists in Newlands and Constantia.
“I have worked in Newlands for five years now, and the majority of our sales have been cash,” says Cyndy Minnaar.
“As in the Atlantic seaboard suburbs, a large percentage of cash sales has been the norm for some time in Newlands, and in many of the other southern suburbs such as Claremont and Constantia and these transactions appear to be on the increase.”
Lew Geffen, Chairman of Lew Geffen, Sotheby’s International Realty says: “This is corroborated by Propstats data which reveals that only 9 (22.5%) of the 40 sales that took place in Newlands between 1 January and end May 2017 to date were bonded”.
“The figures are similar in other sought-after southern suburbs areas during this period. In Constantia, just under 40% of the transactions required finance with most bond applications being for around 50% of the sale price and in Claremont 48% of the transaction were cash sales.”
“For the same period in 2016, Newlands had 42 sales of which 16 (38%) required finance, 50% of sales in Claremont were bonded, and 29% of sales that took place in Constantia required bonds.”
Propstats figures show that by far the majority of buyers in Newlands, Constantia and Claremont were from the Western Cape, with a smattering of overseas buyers from as far afield as the UK, USA, Denmark, China and North and South Korea, and a few from other African countries including Zimbabwe, Angola and Namibia.
“The Newlands freehold purchase price per square metre has long been one of the highest in the southern suburbs, so the area generally appeals to more affluent buyers,” says Minnaar, “and while some buyers do apply for bonds, they generally don’t make the sale subject to bond finance, as they possibly have other means of financing the deal as well,”
She says buyers are often families with school-going children, and sometimes their parents assist them with buying.
“We also have expatriates returning to South Africa from countries such as the UK, bringing their pounds home to invest in property. Otherwise our buyers are scaling down from their big homes with large gardens in Constantia once their children leave home, and they mostly pay cash for their new, usually cheaper purchases as their previous bonds have already been paid off.”
She says most cash buyers look for lock–up and-go style homes with small, easily manageable gardens.
However, in spite of the continued prevalence of cash sales, the subdued economy has begun to affect buying trends, one of the most notable being a cooling in the demand for new homes.
Lew Geffen, Chairman of Lew Geffen Sotheby’s says: “The appeal of the convenience and security offered by the new gated developments hasn’t waned but buyers seem to be becoming more price-conscious and, as the cost of building these upmarket new homes is relatively high, second hand homes are often regarded as better value”.