It’s hard to believe another year is almost behind us. In real estate terms, it’s been a good year with solid performance in the local property market.
One of the key trends in 2015 has been the shortage of listings in the price range up to R 3 million. It’s in this market segment where most buyer demand is. As with all markets, when there is a strong demand and short supply the prices move upwards – which is exactly what’s happened.
In general terms we’ve seen prices increase between 8 – 12 % in the Helderberg area in the price range below R 3 million. There have been pockets with even greater escalation, such as in developments like Kelderhof Country Village.
Property values between R 3 million and R 6 million have also escalated in the order of 5-6%. The more expensive properties haven’t experienced significant escalation in values, but this is likely to follow as the volume of expensive properties selling has increased this year.
Also interesting to note is the renewed appetite that purchasers have for vacant land. Plot prices have regained the ground they lost in recent times as some buyers have opted to build rather than pay higher prices for a resale property and then still have to renovate.
There is still growing demand for homes in secure estates, which now account for about 50% of all properties in Somerset West. A number of new developments are earmarked to hit the market in 2016 to satisfy the growing demand.
Banks have also been consistent this year with ABSA making a strong move to recover some of their lost market share and claw back some of the growth that Standard Bank has made. Average bond approval rates are down over last year, and banks are doing less 100% finance than before. So if you’re purchasing then it’s wise to ensure you have at least a 10% deposit on hand, plus transfer and bond costs.
We’ve had 3 interest rate increases this year. That’s always a challenge for the consumer, but it’s not unexpected. It’s very likely this trend will continue in 2016 so when you incur debt always calculate your affordability on the Prime plus 2% to ensure you can handle any increases.
We’ve seen a steady stream of purchasers moving down from Gauteng – even more so than in previous years. It’s most likely that this trend continues as purchasers move to the Western Cape, not only for the lifestyle, but also for the benefits of local government that functions better than in many other parts of the country.
Rental values continue to grow as tenant demand increases, and escalations of 10 – 12% are not uncommon.
We’ve had nothing to complain about in real estate terms for 2015. It’s been a strong and steady market – and that’s exactly what you want when investing. Thanks for a great property year and we’ll talk again in 2016.
Principal of Harcourts Platinum
Director of Harcourts South Africa