Nine out of ten buyers are now looking to buy under 2 million
The tougher conditions in the residential property market become, the more necessary it is to price any home put up for sale accurately at the right market-related level, says Rowan Alexander, Director of Alexander Swart Property.
“Right now, he says, “we are seeing a big decline in buyers’ willingness and ability to buy in many of the middle and higher priced brackets. In these conditions buyers become shrewder and any attempt to push the price above realistic levels almost invariably results in the home ‘sticking’ on the market.”
The good news, however, says Alexander, is that these tough conditions have not yet affected the lower priced homes. In Cape Town’s Northern Suburbs the demand for homes below R2 million remains as strong as ever.
“By 20th September we had already had 20 offers to purchase and by the end of the month this figure had risen to close to 30 – and it is noteworthy that 90% of these offers are for homes below R2 million.”
Alexander Swart Property, he says, had record sales in July and August and on the latest figures September will also be a near-record month.
Above the R2 million mark, says Alexander, sales are noticeably slower and more difficult to achieve, while sellers of homes above R3 million are facing very difficult times indeed.
This, however, means that, if a buyer does have the resources to buy in the R3 million to R4 million bracket, he will now, says Alexander, be spoilt for choice and may be able to get a home at the same price he would have paid a year ago. However, he warns, buyers should always take into account that interest rates and municipal costs are likely to increase over the coming year.
“It is always worth remembering that a 1% increase in the interest rates results in an extra R 161,000 interest being paid for every R1 million borrowed,” he says.
Some of the property developers he interacted with at a recent STBB conference (at which Thuli Madonsela was the keynote speaker), says Alexander, are now having to rent out new stock so as to be able to continue to service their bonds.
“It seems likely,” says Alexander, “that in the Cape Town Northern Suburbs developers will now be forced to provide more affordable homes, those priced well below R2,5 million and, in doing this, they will have to devise ways of offering even better value for money. I expect that this will result in smaller homes with a focus on lifestyle rather than size.”
23 Oct 2018
Author Independent Author