A problem faced by most Cape Town estate agents, says Bill Rawson, Chairman of the Rawson Property Group, is that, although Cape Town is seen by many upcountry people as a highly desirable place to which to relocate for a career change or retirement, its residential property appears to offer less “bang for their buck” than similar valued properties in the major centres of Gauteng or KwaZulu-Natal.
Quite often, says Rawson, the discrepancies in pricing seem to be so great that potential buyers decide against relocation and he has many agents who have experienced this from time to time.
Any review of the latest figures will, says Rawson, reveal that there is considerable truth in the perception that Cape Town residential property is more expensive than that of other South African cities. The Deeds Office’s July statistics compiled by Lightstone show that the average price of a freehold home in Cape Town today is R1 921 000, while the average price of a sectional title home is R1 438 000.
By way of contrast, in Johannesburg, freehold homes now have an average price of R1 395 000 and the city’s sectional title units have an average price of only R783 000.
In Durban the relevant figures are R1 147 000 and R920 000, while in Pretoria freehold homes on average sell at R1 175 000 and sectional title homes at R910 000.
The price differences between Cape Town and the other major centres, adds Rawson, are exacerbated by the fact that in the all the upcountry cities mentioned both floor areas and plot sizes tend to be 20 to 35% larger than in Cape Town (this does not always apply to sectional title units). In Cape Town, he says, the limited space between the sea and the mountains has for some 75 years ensured that the plots are, by South African standards, relatively small and the floor areas not as expansive as those upcountry.
“Middle class upcountry people moving to Cape Town,” says Rawson, “will in most cases have to accept that in return for what might well be a more enjoyable lifestyle and a more temperate climate they will probably have to accept a quite serious downscaling.”
Are there, however, any financial compensations for this?
Rawson has pointed out that Cape Town residential property values have in the last ten years consistently performed well and been stable. Only for one short period did their growth graph go into a decline.
“In 2009 Cape Town property experienced a serious loss in value. In this year the average price of freehold property dropped year-on-year from R1 211 000 to R912 000. Since then, however, the annual growth has been steady, with the result that today the average price of a freehold home in Cape Town has in round figures risen since 2010 by close on 100%.”
These growth figures, says Rawson, are better than those of Johannesburg, Pretoria and Durban.
Rawson says that Cape Town properties can almost certainly be relied on to continue to escalate at least in line with and possibly ahead of the inflation rate, ensuring the buyer of a solid return on his outlay.
Also of interest – and encouraging, says Rawson, is that today’s buyers in Cape Town are showing a renewed interest in the upper bracket properties. Average house prices in Noordhoek have now risen to R3 420 352, in Hout Bay to R2 962 292 and in Constantia to well over R3-million.
“I think it is likely,” says Rawson, “that the coming summer could see these Cape Town prices rise further despite another 0,5% rise in the interest rate and despite the discrepancies in prices, I do expect the flow of buyers from the north to remain steady.”