One of our readers wrote an insightful letter this week about the ending of the property boom on the West Coast.

Dear Editor

I had the opportunity to holiday on the Cape West Coast this past weekend and was struck by how aggressively the property market bubble has taken over the area.

We were staying near Veldrif, which, as you trace your finger along the West Coast, is beyond Shelley Point and St Helene Bay, facing northwards over the Atlantic.

What struck me first as we drove into town was the vast array of agency boards littering the side of the road on empty plots of land. I'm sorry I didn't take a picture of them, because if anything could illustrate the hard time estate agents must be having in selling homes these days, the myriad of agency logos and billboard along each street would be ample testimony.

Agent offices must make up around 30% of commercial retail space in this small town - as they did in a number of small towns we visited during our stay - and developer billboards ("Don't miss this exciting opportunity!", "A life of luxury awaits", etc.) were on every open piece of land.

For all this hype, however, I didn't see a single person in any of these agent offices, or any "SOLD!" or "LAST UNITS MUST GO" signs anywhere. If there was a property boom in this area, it seems a distant memory. I began to feel sorry for the estate agents I saw - entertaining empty offices all weekend long.

The other major issue I had with the sights I saw, was the disparity between the income clearly being brought to the area by those who have built multi-storey (locked-up) holiday homes, and the communities and towns that existed there first. To my eyes, none of this investment has made it into the community. There was no real evidence of thriving businesses or innovative community-driven projects designed to capture the tourist buck.

Perhaps I missed the obvious signs of development and growth in the area. But really, to my mind, the story I witnessed on the West Coast is a sad one. Who is benefiting from all this divvying up of land for development? If the money from the sale of land went to the municipalities, where has that money gone now? How many sales does the average agent make a year?

And do buyers - desperate for anything under R500k in the Cape area - understand that, unless you are prepared to hold on to your piece of land for 10-20 years, your empty plot will be one of hundreds on offer in the area?

Cathryn Reece
Cape Town

Readers' Comments
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I think this is a load of hogwash. It's far from over, I think our property boom hasn't even started.

Velddrif has had three developments so far, and two in Dwarskersbors in the last four years.

One of these is the popular Admiral Island. This has pretty much sold out and there are now plenty of resales.

The Fisherman's Village has sold out, although Velddrif Quays is still being marketed Both developments in Dwarskersbos are not only sold out, but resales are still happening.

The fact about estate agents' boards is that it is the cheapest form of advertising and with any economic equation the powers of supply and demand control it. If there are more sellers than buyers (due to global economic conditions) then there will be more boards advertising this.

The same applies to estate agents in times when there is a global economic boom and low interest rates. Many people come into the business thinking it's an easy way to earn money, and vice versa in more challenging times.

This is not to say that Velddrif is not a good investment, quite the opposite. I strongly believe that Velddrif is still undervalued – a property on the water with its own jetty in Port Alfred costs R4,5m, whereas a similar in Port Owen costs R2,9m (brand new, five bedrooms plus study).

A plot sells for R330k in Port Owen and five minutes from the beach, river or waterway.

Mark my words, all you sceptics – Velddrif will still be the next Langebaan/Knysna. – Michelle Tiedt

I would just like to point out to Ms. Reece that if she just took the time out to ask about the development in the West Coast region she would realise that it was alive and well.

I live a lot further North than Veldrif, but in my neck of the woods property is as scarce as chickens' teeth. We have out-of-town visitors asking about available property every weekend, and even asking if we have any intention of selling our homes. Property is not very cheap here, with average prices ranging within about 3/4 of the prices in the southern suburbs of Cape Town, but this doesn't stop people from wanting to buy in the area.

Development is slow, so the demand is quite high and property value grows steadily. - Anonymous

Your reader has some interesting points.

The vast array of estate agency boards is firstly a result of the government, in their wisdom, removing the need for an examination or any professional experience or knowledge to practice as an estate agent.

This has meant that every unemployed wheel-tapper's mate and his cousin has become a "property professional", some of them can't even spell it.

What's more, the large agency groups seem to dish out franchises willy nilly to any "Moegeo" who can come up with the readies. So buyer or seller, beware, the so-called estate agent from "Idyllist Steyn" with branches throughout the country, may know less about it than you do.
Her "principle" even less.

In this very town there is a "principal" who was defrocked from his franchise in one large group for disgusting behaviour only to immediately pick up another without, it seems, pausing for breath.

The plastering of boards all over is a symptom of this.

"If someone else has a board, it must be for sale, I'll put up mine and see what happens."

The boom is over, but signs of the next one are showing. The current oversupply is an excellent time to invest if you study the trends as I have done since 1983. It's a stepped graph and, in my opinion we are approaching the end of the flat period, because we have inherent attractions that make the place very sellable to people who want to live, go on holiday or retire here, have good weather, proximity to Cape Town, fishing, sailing, beaches etc.

Unfortunately, many of these new "agents" have no idea of these features since they only been here two months and know less about the area than they know about the estate agency business.

The council is only too happy to permit any development you want to do.
Their only question seems to be: "What will the rates income be?"

So all these empty plots mean that someone is filling the council's coffers which they then spend on the disadvantaged.

For example, one suburb, Port Owen, is supplying the Berg River Municipality with over 70% of its rates income. So the good property owners of Port Owen are subsidising the good people of Veldrif, Laaiplek, Noordhoek, Dwaarskersbos, Porterville, Piketberg and Aurora.

The council is staffed almost exclusively by the disadvantaged group so the boom has definitely been a windfall for them. And they jacked the rates up radically just get more out of the cash cows of up-market property which developers put into their previously fairly poor fishing communities.

Invest with your brain in gear. Check out your property professional's credentials. Check out the property's attributes as an investment.
Study the market trends. Put in more research than you would into buying a new car.

We have a fantastic part of the country here, in my opinion one of the best, let those who want to enjoy it both physically and financially and hopefully ethically. - Gideon Langart

I agree 100%! That bubble blew three years ago but the agents kept on peddling the stands! Being an agent does seem to require a lack of conscience as they are fully aware that they are selling lies - and a lack of integrity due to not being honest and open about the actual reality.

Buyers from out of town are the "TARGETS"!

There is NO West Coast town worthwhile investing in at this point in time. - RIPPED OFF BY AGENTS.

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