In a number of upmarket suburbs in Cape Town, there are substantially more cash buyers than buyers using bonds to purchase properties.
This two bedroom en suite flat for sale in Sea Point, Cape Town, offers sweeping ocean views and the use of a communal swimming pool. It is selling for R3.495 million - click here to view.“We believe this shows a growing preference by buyers to invest their money in tangible assets as opposed to the stock market and other intangible assets,” says Francois Venter, Director of Jawitz Properties.
He says it is no secret that the South African stock market is widely considered overheated, which means the level of risk in the stock market is increasing. This is prompting many investors to consider less volatile, more tangible assets where they feel safer.
“The fact that buyers in more expensive suburbs are choosing to use cash shows that they are viewing property as a good investment over the medium to long term,” says Venter.
Figures from Propstats for the first six months of 2015 show that of 365 properties that changed hands on the Atlantic Seaboard, for example, 270 or 73% of these were cash sales.
This four bedroom, four bathroom home selling in Fresnaye has an undercover patio, braai area, swimming pool and double staff quarters. It is on sale for R45 million - click here to view.Venter says this trend could be seen throughout the area, from very expensive suburbs like Camps Bay, Bantry Bay, Clifton and Fresnaye, through to areas like Green Point and Mouille Point.
In Sea Point, out of 117 properties sold, 95 were cash sales versus 22 sales where bonds were used.
“Sea Point is known as a suburb with a strong, sustainable rental market. The high level of cash buyers tells us that property is becoming a preferred asset class for investors,” he says.
This trend was also visible in a number of upmarket areas in the Southern Suburbs. These include both Constantia and Newlands where approximately 60% of total sales in each of these areas were cash.
In Plumstead, on the other hand, where buyers are likely to have less financial manoeuvrability, just over 60% of sales were through bonds.
This two bedroom, one bathroom flat for sale in Green Point in Cape Town has an undercover parking bay and is selling for R3.295 million - click here to view.In the City Bowl, the ratio between bonds and cash was more or less even with the exception of De Waterkant where 70% of sales were cash, and Higgovale where about 68% of sales were cash.
When it comes to sectional title as opposed to freestanding, Venter says bonds often dominate sectional title sales. But even here there were more cash buyers - of 790 sectional title properties that changed hands, 477, or 60%, were cash sales and 313 were with bonds.
“We wouldn’t be at all surprised to see this trend continue,” says Venter.
