Strong performance from Chas Everitt International in a cooling market
The previously resilient seller's market in the Western Cape is showing signs of strain as residential property buyers grow more bearish in their outlook and expectations. "However, the old adage of position-position-position remains true and there is still money to be made," says Fanie Lategan, principal of Chas Everitt International Western Seaboard. "Even those who speculate can still reap rewards, although more modest than a year ago. "Amateur speculators who have relied on the rising tide, however, would be better off looking for alternative investments."
André de Villiers, principal of Chas Everitt International Southern Suburbs, says False Bay still has a 10 percent margin for price increases over the next year. "As far as the Southern Suburbs are concerned, though, I would not be at all surprised if the price increases between now and the end of the year are virtually nil - although there is no indication that prices will drop." De Villiers says the rental market in Cape Town has also softened, with the exception of Muizenberg where a number of developments are coming on stream. "The supply of rental accommodation however, is still very limited." Meanwhile Chas Everitt International Northern Suburbs had another bumper month in June, again exceeding budget forecasts, and co-principal Charl Louw says the agency is constantly increasing its market share.
"We are privileged that our area is not seasonally driven, and the Northern Suburbs are increasingly becoming the preferred destination for many Capetonians." This is supported by the latest statistics in the RPPR (Residential Property Price Ranger issued to estate agents by Cape Property Services), showing that house prices for April 2006 in the Durbanville-Bellville area averaged R1,2 million compared to R1,4 million for the whole of the Western Cape - the gap having become much smaller than a year ago. "The Northern Suburbs, like many other residential areas in the Western Cape, are however experiencing a slowdown in the number of units sold, and the average time taken to sell property has increased to 6 weeks," says Louw.
"Unfortunately, some sellers still do not realise that the market has changed to a buyers' market. Price increases have slowed down and particularly in this period of increasing interest rates, sellers need to get used to accepting more realistic offers. We find that houses are selling at about 10% below asking price on average." Elmarie van Huyssteen of the Chas Everitt International office in Stellenbosch says the slowing market has brought about a sharp reduction in the number of active agents in the residential market, from 150 in January 2005 to 118 in January this year and down to 108 in May. "During the past two months, three other well-known agencies have also closed their doors. Two were national franchises and one regionally-based," says van Huyssteen. "But new agents are still entering the market on a daily basis without proper training, which could have catastrophic results for themselves and their agencies."
Lategan notes that the Western Seaboard seems to have ignored the thread of
rising interest rates to date. "With turnover at 10 percent of total stock
in some places, the area remains one of the fastest moving regions in the Western
Cape. We think there are still plenty of opportunities and have embarked on
an extensive recruitment drive to attract new agents." The Western Seaboard
stretches from Melkbos to Paarden Eiland and includes Blouberg, Parklands, Sunningdale,
Tableview, Milnerton, Rugby and surrounding areas. There are some 27 000 residential
units in this belt and property prices range from R350 000 in Parklands to R35-million
on the
Blouberg seafront. Lategan says properties of up to R1,5 million are still selling
in under two months but that those above this mark are taking longer. He, too,
says many sellers are over optimistic and that asking prices are generally some
20 percent above selling price now.
He notes that Chas Everitt International Western Seaboard has diversified into the commercial market and it appears that several other traditional residential agencies are now doing so as well. "There is plenty of action in the commercial market and we expect it to continue over the medium term. We expect the residential market to move sideways for the time being but to show new momentum as we approach the 2010 Soccer World Cup."
Issued by Chas Everitt International
For further information call Brenda Smith at
Chas Everitt International Bryanston on 011 463 2033
or visit www.chaseveritt.com