Luxury home prices are generally declining in many of South Africa’s most sought-after suburbs, and sellers are more willing to negotiate.
Citing recent FNB statistics, the property group noted that the rate of home price growth on the Atlantic Seaboard – South Africa’s most expensive area – has dropped from a high of 25.5% in the first quarter of 2016 to -5.1% in the first quarter of 2019.
“The rate of home price growth on the Atlantic Seaboard, which is South Africa’s most expensive area, has fallen from a high of 25.5% in the first quarter of 2016 to -5.1% in the first quarter of this year,” said Rory O’Hagan, head of the luxury portfolio division of the Chas Everitt International property group.
“House prices in the Southern Suburbs, including areas like Constantia, Bishopscourt, Newlands and Claremont are currently declining at the rate of 2.4% a year, after reaching a peak annual growth rate of 15.4% in 2015.”
O’Hagan said that he has seen similar drops in Gauteng and other parts of the country.
In Hyde Park, for example, brand new cluster homes that were on for sale at R28 million are now priced at R20 million, and a home originally listed for R19 million is now available for R15 million, he said.
“Our luxury portfolio teams in estates such as Val de Vie in the Cape Winelands and Zimbali on the KZN North Coast report a similar trend, with asking prices on specific homes dropping in the past month from R16.9 million to R13 million; from R15.9 million to R12 million; and from R13.9 million to R11.5 million.”
O’Hagan said that for luxury buyers planning to upgrade to a bigger property can acquire more home for their money in the current market. He said that appetite for luxury property around the world – including South Africa – is currently also being boosted by volatility in equity markets, which traditionally prompts investors to turn to brick and mortar.
“Locally, it seems that there may be an interest rate cut in July which would further boost demand but as things stand, we are already seeing a positive response to the lower prices in many of our heritage suburbs,” he said.
However, he noted that sales have been more muted in the country’s estates. “But our teams report increasing interest and we believe they will shortly also start to show a significant upturn in sales, especially following the assurances given in the state of the nation that there will be no interference with the independence of the Reserve Bank and that land reform will take place in an orderly manner,” O’Hagan said.