Cape Town living shift as home buyers target these affordable suburbs
The shift back to the suburbs has been good for Cape Town’s residential sales and rentals markets according to the Seeff Property Group.
After initially struggling in 2020 and lagging other metro areas, the market bounced back in 2021 to record highs and our agents are now seeing a shortage of properties to sell and rent out in many suburban areas across the city, it said.
Lightstone data shows that a record 37,432 transactions worth over R69.9 billion were recorded for 2021, well above the 2014/5 boom transactions of around 34,000. Over 66% of transactions were for freehold property, predominantly in the suburban areas.
The average transaction price for the Cape Metro stands at R1.8 million (2021) compared to R1.47 million in 2015. It currently stands at over R2 million which could be due to strong activity observed in the upper price bands this year according to Samuel Seeff, chairman of the group.
Across most of the suburbs, properties are still selling well within 8 to 12 weeks on average depending on the price band. Correctly priced properties are not only selling faster, but achieving better prices, generally within about 5% to 7% of asking prices on average.
Affordable suburbs below R2 million contributed the highest volume in sales
The vast majority of sales across the Cape Metro over the last year fell below R2 million with some 40% below R1.5 million.
According to Johann Groenewald, licensee for Seeff Goodwood, affordability remains a priority for most buyers. He added that with more people moving to areas such as Goodwood, and having the means to purchase a home there is good demand, but unfortunately not enough well-priced properties to go around.
In demand are neat, compact homes with good facilities, especially family homes with a flatlet in the R1.7 million to R2 million price range and two-bedroom apartments in the R700,000 to R1.2 million range.
While many are selling to downscale or retire, Groenewald said that sellers are also looking to upgrade. With the market slightly flatter, sellers must now focus on market-related asking prices or they could miss out. It takes 6 to 8 weeks to sell, and sellers often have to settle for 5% to 10% less than their asking price. Overpriced properties simply do not sell.
The rental market remains active, but upfront costs and deposits can be problematic in the affordable sector. There is good demand for well-maintained properties. Three-bedroomed family homes achieve rental rates of R12,000 to R16,000 and two-bedroomed apartments around R7,000 to R9,500 per month.
Buyers and tenants flocking to Cape Town’s Northern Suburbs
Helga Clemo, licensee for Seeff Century City said 2021 was an excellent year for the market. And despite a slow start to 2022, demand is now strong with stock levels steadily declining.
There are still a lot of first-time buyers looking for two-bedroomed apartments below R2 million which tend to sell fast. There is also equal demand in high-end properties. The low stock levels mean that properties that have been on the market for a while are now selling.
Many sellers are offloading their secondary properties. These are often tenanted which is a drawback for buyers looking for own-use units. A concern is a tendency for sellers to “test” the market with high prices which holds up sales. If correctly priced, however, properties are selling quite quickly.
The beautiful surroundings, modernity, greenery, and walkability in the neighbourhood is a big drawcard. It is a high-demand rental area that now has low rental stock levels. Aside from locals, tenants are coming from Johannesburg and now also Durban and there are often multiple applicants for a rental property.
Century City is a strong market for rental investments. The highest demand is for unfurnished properties. One-bedroomed apartments rent out for around R11,000 per month, a two-bedroomed unit for R15,000 and a three-bedroomed apartment for R18,000.
Centrality is driving demand for suburbs such as Pinelands and Thornton
Lightstone data shows that Pinelands and neighbouring Thornton enjoyed a near record year in 2021. Pauline Hareb, sales manager for Seeff Pinelands and Thornton said while there has been a reduction in buyers, there is still good demand and a shortage of stock.
The central location and proximity to the Old Mutual Head Office, Cape Town CBD and Southern Suburbs are strong drawcards for the suburbs with a healthy sales and rentals market. Both areas are popular with families. Pinelands is especially popular with professionals and is the only suburb with high-earning buyers with two degrees on average.
Family houses with four bedrooms are most in demand in the R3 million to R4 million range. If priced correctly, these can sell in just over 8 weeks and for within 5 percent of asking prices. Overpriced properties often result in 10 percent below the asking prices. In Thornton, properties below R2.7 million are selling quite quickly.
The highest demand for rental houses is in the R15,000 to R20,000 per month range and for complexes and apartments around R7,000 to R9,000. High prices around the R20,000 per month range take much longer to find tenants.
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