July rainfall cape town weather

View of Table Mountain and Lions Head, Cape Town

Cape Town’s complex property market hits seven year low

Figures point to a clear dip in the Cape Town property market.

July rainfall cape town weather

View of Table Mountain and Lions Head, Cape Town

Residential sales experts have noted a decrease in average gross yields for realtors, the first downward trend of its kind in seven years. Property specialists believe this is due to an oversupply of overpriced properties within the City Bowl and Atlantic Seaboard.

While the statistics point to deterioration, luxury apartments in Bantry Bay and Mouille Point have recently fetched prices of R53.8 million and R78 million respectively. If there are properties selling at such exorbitant prices, how is it possible that the market is in decline?

Property in Cape Town: What goes up, must come down

Household and property sector strategist at FNB Home Finance, John Loos, explains that after outperforming the rest of South Africa for ten years, the City Bowl’s freehold property market has taken a hit:

“A correction was expected to happen. The Atlantic Seaboard and City Bowl showed a combined growth of over 111% the past five years, which is simply exceptional.
Comparatively ‘affordable’ suburbs on the Cape Flats have seen major property price growth, while more affordable suburban areas to the North also hold up better, indicating a search for relatively affordable properties.”

It seems that most Capetonians are slowly becoming unable to keep up with rising rentals in the city, rather seeking out cheaper alternatives in the suburbs.

Residential sales and letting specialist at Remax Cape Town, Grant Rea, explained to Business Insider:

“As a whole, we noticed a significant shift occur from around October 2017 that saw landlords facing vacancies for the first time in years. Previously, the demand was always significant enough to ensure each property found a great tenant.”

A significant slowing in-migration from other parts of the country is also being blamed for the deterioration, with the drought in the Western Cape also adding to the despair.

Still, according to Ian Slot of Seeff, 90% of the luxury apartments that cost more than R20 million have been sold to South African buyers.

It would seem then that Cape Town is becoming a playground for the rich, even more so than before, with extravagant apartments providing a hassle-free, lock-up-and-go lifestyle; convenience and ease for those who can afford it.