South Africa is increasingly being seen as an investment location in which to buy property and the weak Rand is encouraging global investors to buy homes, says Lanice Steward, managing director of Knight Frank Anne Porter.
Steward says in their experience, these property investors are not necessarily from the traditional western countries, but from other African countries, Russia and Eastern European countries.
The weak Rand can work for South Africans, to attract buyers into the market as foreign buyers will bring everything with them, create employment and invest in South Africa quite heavily, according to Steward.
According to bank surveys, house price growth improved in May, however, this growth is expected to remain in single digits for the remainder of 2013.
Pam Golding Properties (PGP) reports that after six years of subdued property sales and global economic turmoil, the residential property market in the Western Cape appears to be consolidating into an upward trend.
According to Laurie Wener, PGP managing director for the Western Cape metro region, since late 2012, home sales have improved in areas such as the Atlantic Seaboard, Western Seaboard and West Coast seeing sales figures approaching and even reaching those of 2007.
Wener notes that thanks to the weaker Rand, foreign buyers are actively buying property ranging from freehold homes to apartments in all price brackets as are local and national buyers.
Areas such as Fresnaye, Camps Bay and Bantry Bay are said to be top performing locations in terms of sales achieved of up to R31 million, while areas such as Bishopscourt, Rondebosch and Paternoster continue to achieve good sales.
Holiday homes in all suburbs are also seeing demand especially those located along the coastline.
Family homes priced between R2.5 million and R10 million in Rondebosch, Newlands, Claremont, Blaauwberg and the surrounding Western Seaboard suburbs, as well as Green Point, Sea Point, Fresnaye, Camps Bay and Hout Bay are selling well.
The latest Absa House Price Index reveals that instead of improvement as other banks note, the Index in May slowed down to 11.1 percent year-on-year (y/y) from 11.7 percent y/y in April.
Wener notes that buyers are prepared to pay a conservative premium for a brand new property, with all the modern conveniences and top security which this offers.
The agency reports that the rental market in Cape Town is buoyant across all price brackets with top-end homes fetching monthly rentals of between R20 000 and R55 000.
While banks remain cautious when lending, the home loan approval rate is high with many buyers getting as much as 80 percent loan-to-value.
Meanwhile, the latest Absa House Price Index reveals that instead of improvement as other banks note, the Index in May slowed down to 11.1 percent year-on-year (y/y) from 11.7 percent y/y in April.
Writing in the report, Jacques du Toit, Absa Home Loans property analyst, says the low y/y price growth was evident especially in the small and medium-sized categories of the market, with month-on-month price deflation occurring in both these segments of housing.
“Price growth in the segment for large homes appears to be at an upper turning point,” he says.
He says the average nominal value of small homes (measuring between 80 – 140 square metres) was R720 600, medium-sized homes (141- 220 square metres) R1 061 800 and large homes (221 – 400 square metres) R1 625 900.
Du Toit adds that real house price growth will continue to be driven by a combination of movements in nominal prices and consumer price inflation.- Denise Mhlanga