Rocketing demand from millennials and buy-to-let investors has caused property prices in Cape Town’s fashionable CBD andareas to explode over the past few years – to the extent that those same buyers are now having to look further afield to find homes they can afford.
This is according to David Britz, sales and marketing director of developer Multi Spectrum Properties, who says that while many first-time buyers would love to live in the regenerated CBD or a trendy inner suburb like Woodstock, Observatory or Rondebosch, most are finding that the market entry level in these areas is now just too high for them.
“As for investors, those who got into these markets five years ago have done very well in terms of capital growth and are enjoying good rental yields. But many who are contemplating new buy-to-let purchases now are finding that the potential returns over the next five years are not as good because of the relatively high purchase prices.”
And both groups, he says, are seeking answers on the Western Seaboard and, to a much greater extent, in the metro’s Northern Suburbs, where developments like MSP’s Buh-Rein Estate offer all the advantages of the ‘new urban’ lifestyle to be found in the city, at a much lower cost. This is illustrated in below table:
|Suburb||Average sectional title price 2013||Average sectional title price 2018||Average freehold price 2013||Average freehold price 2018|
|R1 million||R1 million||
|R1.726 million||R1.25 million||
|R1.75 million||R2.8 million||
|R1.85 million||R970 000||
Data source: Lightstone
“There are also scores of new developments going up now in northern areas like Brackenfell, Kraaifontein and Kuils River, and it has been estimated that up to 40% of current buyers in these areas are first-timers – in sharp contrast to the first-time buyer percentage in Cape Town as a whole, which FNB has estimated at under 10%,” says Britz.
Meanwhile, he says Buh-Rein Estate, which has been proclaimed as a fully-fledged suburb with its own postcode, was ranked as the fifth most affordable suburb in Cape Town in a survey conducted late last year.
Located just to the north of Kraaifontein, this integrated lifestyle development offers modern apartments, townhouses and freestanding homes in a series of secure ‘villages’, as well as a pool situated close to a family restaurant, outdoor gym, jogging trails and multi-purpose sports field and pavilion for residents.
“The estate will shortly also boast its own convenience shopping centre, as well as a Checkers supermarket, a gym, a service station and a 10 000sqm storage park. Private schools within easy reach include Meridian Pinehurst, Curro Castle in Uitzicht and Curro Durbanville, while tertiary education group Stadia is currently planning a private university just over 3km away close to the end of Okavango Road,” says Britz.
The latest residential developments in Buh-Rein Estate include Blue Lily Lane, which offers two bedroom apartments with top-quality finishes at prices from R1 134 900, and Sterling Grove, which offers luxurious double-storey homes with three bedrooms, two-and-a-half bathrooms and single or double garages at prices from R1 819 900.
A limited number of apartments are also still available in the completed Libertas sectional title development at prices from R989 000 and in the Sable Ridge freehold development, at prices from R1 719 900.
He says there is also high demand for long-term rental homes here from those working in Stellenbosch, Paarl, Kuils River and the Durbanville CBD and keen to avoid having to commute from central Cape Town, so the estate is also attracting a lot of attention from buy-to-let investors.
“Rentals for two bedroom, one bathroom apartments in Buh-Rein Estate currently average R8 000 to R8 500 a month, and resale units are currently priced at between R700 000 and about R1.2 million. By contrast, rentals for similar units in central Cape Town currently range from R11 500 to around R14 000, but the purchase prices of such units only start at around R1.8 million and go all the way up to about R2.9 million.”