Alarming fall in luxury property sales in South Africa – now at the worst levels in 10 years

With just four sales to date in 2020, the R20 million-plus super luxury Atlantic Seaboard market has fallen to its lowest level in a decade, says realtor, Seeff.

This is despite listings in areas like Clifton, Camps Bay, Fresnaye and Bantry Bay climbing – up 200 new listings this year.

“Whereas the low- to middle-income sectors are seeing a notable uptick in activity on the back of pent-up demand, the top end is heavily influenced by sentiment which is at an all-time low according to the latest RMB/BER Business Confidence Index (BCI),” Seeff said.

Ross Levin, managing director for Seeff Atlantic Seaboard and City Bowl noted that during the boom period of 2016-2017, the market was doing about five sales per month in the R20 million-plus sector, with prices reaching R80 million to R120 million in Clifton.

Last year’s highest price reached just R60 million in Fresnaye, while this year so far, just R34 million in Camps Bay, he said.

“With no real price movement in the super prime sector, this is arguably one of the best periods for ‘bargain hunting’ that we have seen in the last decade,” Levin said, adding that that there are now many new listings not seen before while sellers are motivated to take lower offers.

The realty group said that although it is still early days for the market under lockdown level 3, there are encouraging trends emerging in the luxury market, in particular a renewed interest from semigration buyers.

Levin said that buyers that take a long-term view, could reap rewards when the market cycle ticks up again.

Uncertain future

According to property data group Lightstone, South Africa’s property market faces an uncertain future, with its modelling showing a downturn in three different scenarios – including a generic recession (GDP down 3%), an uncharted direction (down 6%) and an extreme case (down 10%) situation.

In all three scenarios, house price inflation goes down, the group noted, by 3.8%, 8.8% and 14.5%, respectively.

While these forecasts are grim, Lightstone said that the property industry, as with many other industries, will undoubtedly adjust to new ways of working.

Lightstone said that the luxury market segment will continue to suffer even more than it did in previous years under all scenarios tested, however.

“It is important to understand that we are operating in extremely uncertain conditions and that the exact outcome is impossible to predict with very little insight of when the government will announce further easing of economic restrictions,” the group said.

“At this stage, the only certainty we have is that ours, as well as many other economies across the globe will have to work harder and smarter in the post lockdown recovery phase.

“It is, therefore, crucial for businesses to have agility around their strategic plans to enable them to rapidly respond to any scenario that may play out.”

Read: Here’s what June property data tells us about South Africa’s recovery

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Alarming fall in luxury property sales in South Africa – now at the worst levels in 10 years