Despite the harsh economic and social impact of the coronavirus pandemic, Cape Town’s Central City residential property market has proved to be resilient.
While sales activity slowed sharply during the initial levels of the national lockdown and the subsequent delays in reopening the Deeds Office, the brisk pace of recovery in property sales over recent weeks has surprised market analysts and estate agents alike.
According to Alisdair Crofton, Rawson Property Group Cape Town CBD franchisee, “more first-time buyers and out-of-town investors are taking advantage of the record low interest rates. Sellers are also motivated to sell faster and are therefore less likely to push for top-end prices. There is a steady flow of sellers looking for valuations with reasons ranging from needing cash to selling investment properties in order to prop up a business for a while. The next six months moving into the first quarter of 2021 will be very interesting”.
Basil Moraitis, Regional Manager: Western Cape at Pam Golding Properties, advises that "while this market continues to perform solidly, we’ve noticed a significant 38 % increase in listings coming onto the market when compared to the period prior to the lockdown. This indicates that this market is still very much a buyer's market and consequently correctly pricing new listings is critical to success.
“PropStats, the reporting division of the Institute of Estate Agents, clearly shows the emerging trends: in June and July 2017, there were 28 concluded sales at an average selling price of R2 509 743, just 4.7 % less than the listed price. For the same period in 2020, after the recommencement of residential real estate activities, there were 15 sales at an average selling price of R2 016 667, 14.6 % under the listed price. This is a correction of about 20 % off the market highs in 2017.”
Several of the Central City's residential buildings are around Church Square.
Commenting on this adjustment in property prices, Tasso Evangelinos, CEO of the Cape Town Central City Improvement District (CCID), says: “There is no doubt that property prices in the area have declined over the past six months, with the deterioration in business conditions caused by the nationwide lockdown accelerating the pre-existing correction in property prices. This price correction is an inherently good sign as it means that the previously elevated prices are adjusting to prevailing economic realities.”
That said, the adjustment in property prices is also a welcome sign of things to come, specifically, more affordable housing within the city centre.
Ryan Joffe, the owner of Ryan Joffe Properties which is currently developing The Rockefeller aparthotels in the CBD, says creating more affordable housing options within the city centre will be a trend in the coming months.
“Through these types of projects, a lot of people can get into the market and the low interest rate environment certainly helps.” Joffe adds that affordable projects which qualify for the City’s housing subsidy, will result in an increase in people migrating to the city centre and “buying property for the same price that they were renting at before”.
Adds Evangelinos: “Cape Town’s CBD offers excellent investment opportunities for first-time buyers and savvy investors who wish to enter the market, even more so now that prices have corrected and interest rates are at the lowest level in nearly 50 years.”
IMAGES: CCID, Ed Suter