Apartments along Beach Road in The Strand in the Western Cape are selling at discounts of between 40% and 50% according to Wouter Joubert of Rawson Properties.
He says that under normal market conditions there is a 7% to 10% sales turnaround on the 1 700 properties on Beach Road but in the past two years this has dropped to just 2% or 3%.
“Buyers are few and far between and as a result there is now a huge oversupply problem and this has led to prices falling sharply,” he says.
This huge stock, coupled with the very conservative nature of buyers means that prices on Beach Road are between 40% and 50% lower than they were a few years ago. Joubert says it is the largest drop in prices ever seen in the area.
“Chic modern units which came onto the market at R30k per square metre are now selling at about R16k and even less prestigious older blocks have seen price drops from R12k per sqm to just R8,5k.
“This situation has been exacerbated by speculative investors who had confidently expected to be able to resell the properties within 12 or 24 months at a profit of between 10% and 20% as happened in the boom periods between 2003 and 2007,” says Joubert.
“This is no longer the case and speculators are losing heavily,” he adds.
For the past four years there have been virtually no new developments along Beach Road.
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