27 Dec 2012
Property buyers in Cape Town are reportedly showing a renewed interest in freestanding homes.
An analysis of Rawson Properties’ 2012 achieved sales prices nationally has shown a revival in freehold property, with an annualised growth rate of 6 percent whereas in the sectional title sector a number of units have been in negative growth territory.
Tony Clarke, Managing Director of the Rawson Property Group agrees with the FNB property economists, John Loos and Johann Swanepoel, who in a review attributed the poor sectional title growth to the exuberant ‘run’ on these properties between 2005 and 2008. This probably resulted in their becoming overpriced and an adjustment now being necessary, says Clarke.
“Until quite recently the sectional title sector was very much ‘the flavour of the month’ and comprised almost 70 percent of all new developments in South Africa. As a result, in the boom period sectional title prices appreciated very rapidly.”
He says it is now the turn of freehold property to catch up, which it is doing in a slow fashion, with real growth just 1 to 1.5 percent above the inflation rate.
He notes the revival of the freehold market makes this a good time to buy in this sector, the old principle of buying early on a rising tide always being a good one.
An analysis of sales figures in Cape Town indicates that on a square metre basis, the Northern suburbs prices now offer better value than those of the Southern suburbs.
Clarke says he realises comparisons are difficult because the two precincts have different cultures and appreciate different designs, scenery and amenities. However, it is relevant that, even in the upmarket sections, both of which have a large number of designs, prices are less expensive in the Northern suburbs than in the Southern suburbs.
He says if one looks at the less expensive areas, such as Brackenfell, with an average sales price of R1 million, they appear to offer better value than, say, Wynberg, where units are far smaller and have an average price of R1.4 million.
Taking the precincts as a whole, the Southern suburbs’ average price is R2.8 million, whereas the Northern suburbs is R1.6 million.
Clarke adds one of the reasons for the discrepancy has been shown by a Lightstone survey, which indicated the salaries of residents are higher in the Southern suburbs. In the Northern suburbs, only Plattekloof and Welgemoed have residents earning above R50 000 per month while in the Southern suburbs, residents in Constantia, Tokai, Claremont and Rondebosch on average earn above R50 000 per month.
He says the differences in income will ensure that Southern suburbs prices tend to remain expensive, but it should be noted that their survey indicates price rises in Northern suburbs homes. Freehold homes are, percentage-wise, now ahead of those of the Southern suburbs and seem set for a continued, albeit slow, upward course.
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