The Atlantic seaboard is the only entirely anomalous region in South Africa as far as property prices and quantity of bond applications are concerned, with many properties selling for well over R100 000/m² and only 10 percent to 15 percent of buyers applying for bonds.
That’s according to Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, who says the difference becomes exceedingly apparent if you consider that luxury homes in Johannesburg now cost about R20 000/m².
“I’ve never seen a market in SA in which bond applications are as low as they are now on the Atlantic seaboard. To have a cash-buyer base of more than 80 percent in one area is unprecedented in the SA residential property market,” says Geffen.
Lew Geffen Sotheby’s International Realty Atlantic seaboard principal, Brendan Miller, says the largest market movement at the moment is in sectional title units, which more than half the time are pre-sold within days of obtaining a listing.
“We have waiting lists of buyers for flats in Sea Point, Green Point and surrounding areas and anything priced between R3m and R7m can be sold within days.”
According to property sales aggregation website Propstats.co.za, about 250 sectional title apartments and townhouses have been sold on the Atlantic seaboard in the first five months of the year, compared to just under 100 free-standing properties.
The value of the sectional title properties that have changed hands on the Atlantic seaboard since January 1 is around R965m and on average the sale price has been within 8 percent of the listing price, according to Propstats.
But though there have been far fewer sales of freestanding homes, the total value of these properties sold is more than R1 billion.
Prices of more than R100 000/m² are the norm now for Clifton, says Geffen, but older units in need of renovation in other suburbs along the coast can be sold for as little as R30 000/m².
“Property prices on the Atlantic seaboard are completely out of kilter with everywhere else in SA,” says Geffen. “But they are realistic if buyers are lining up and are prepared to pay the listing prices, which is clearly the case.”
Geffen predicts that the sectional title market might slow marginally as owners try to push up prices, but institutional bond applications will keep prices in perspective.
“There aren’t that many bonds in the area, but when banks start saying they won’t grant a bond because the sale price is too high, it starts having a domino effect because much of the value of a property is derived from the value of its location. If banks say the sale price for that location is unreasonable, it tends to have a knock-on effect.”
Miller says the next development corridor on the Atlantic seaboard is the Regent Road stretch of Sea Point from St John’s Road to the Queen’s Road Circle, which was kick-started last year with the redevelopment of the new shopping centre that houses Checkers.
“Developers are buying up old blocks and doing them up, or looking for smaller blocks to extend with modern apartments. Regent Road is definitely the place to watch,” says Miller.
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