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Luxury home sales and price growth

14 Mar 2014

Estate agents report that luxury homes are now seeing price appreciation and high demand from buyers with money.

A four bedroom house in Clifton, Cape Town, is selling for R24.95 million through Seeff Sea Point. Click here to view.

According to Tony Clarke, Rawson Property Group managing director, their group saw 37.72 percent year-on-year (y/y) in the total revenue of homes sold and priced above R2 million.

He notes that in particular, an increase was seen in locations such as Constantia and Franschhoek in Cape Town, Bryanston and Morningside in Johannesburg, Waterkloof in Pretoria and Kloof and Umhlanga in KwaZulu-Natal.

He points to the fourth quarter of 2013 Absa report that shows that luxury homes (priced from R3.8 million to R17.8 million) saw an average y/y increase of 6.6 percent from 6.7 percent in the third quarter. 

Seeff Properties report that buoyed largely by the weak rand, property sales to foreigners on the Atlantic Seaboard and in the City Bowl over the last year are up by about 50 percent, says Ian Slot, managing director for the area.

He points out that in the five high net worth suburbs (Clifton, Bantry Bay, Fresnaye, Camps Bay and the V&A Waterfront), about 66 properties to the value of just over R800 million sold to foreign buyers in 2013 representing just over 30 percent of all sales.

Apart from UK and European buyers, he notes that they are seeing demand from African and Middle and Far Eastern buyers (including Chinese) increasing y/y as well as local buyers with some coming from Johannesburg.

A three bedroom cluster home in Bryanston is selling for R3.86 million through Rawson Properties Bryanston. Click here to view.

Luxury homes sold include, among others, a villa in Clifton Road for R55.86 million and three villas in Fresnaye that sold for a total value of R52 million.

According to the agency, stock levels are low as demand has hit an all time high coupled with the fact that sellers are achieving figures quite close to their asking price.

Seeff luxury market specialist Lance Cohen says property is a safe-haven for wealthy people but also, the top five suburbs in Cape Town have a “cool factor” – location, stability, accessibility and attractions, all of which appeal to buyers.  

Clifton, Bantry Bay, Fresnaye, Camps Bay and the V&A Waterfront top the list of big ticket sales not only in the city, but nationally.

In the last 12 months, about 280 properties have sold in these suburbs to the total value of just over R2.458 billion, representing about 22 percent of the total rand-value of sales in the metro (approx. R11.285 billion) over the same period.

This includes 22 property sales over R20 million, nine of which were in Clifton with the highest price being R55.86 million while the highest prices achieved in other suburbs are R52.5 million for a penthouse at the V&A Waterfront (Pinmore), R34.5 million for an apartment in Bantry Bay (The President), R31 million for a villa in Fresnaye (Ave Deauville) and R30 million for a villa in Camps Bay (Theresa Ave), according to Cohen.

“While price growth on the whole has remained relatively flat, the average prices in these suburbs continue to rise and are up by about 34 percent on average in nominal terms since 2007.”

Priced at R4.375 million, this five bedroom home in Kloof in KwaZulu-Natal is selling through Rawson Properties Kloof (Upper Highway). Click here to view.

The average price of property in Clifton is R18 million (up by 29 percent from R14 million), followed by Bantry Bay at R9.8 million (up by 56 percent from R6.3 million), Camps Bay at R8 million (up by 25 percent from R6.4 million), the V&A Waterfront at R8 million (up by 19 percent from R6.7 million) and Fresnaye at R7.6 million (up by 41 percent from R5.4 million).

House prices

We have heard it before - house price growth is set to remain in single digits this year.

The Standard Bank House Price Index shows that freehold properties grew slightly to 6.1 percent y/y from 5.8 percent in January while growth in the sectional title properties (primarily flats and townhouses) fell to 4.3 percent y/y from 4.9 percent.

Sibusiso Gumbi, bank analyst, explains that they ascribe the diverging price trends in freehold versus sectional title properties to the comparatively stronger supply response by flats and townhouses, and the consequent quelling of price pressures.

He points out that the number of flats and townhouses completed in 2013 was up 9.1 percent y/y, compared to completed freehold dwellings which have contracted 8.3 percent y/y; within freehold homes, the supply of new smaller dwellings (less than 80 square metres in size) contracted 12.9 percent y/y while the supply of larger dwellings (measuring more than 80 square metres) contracted 0.2 percent y/y.

Jacques du Toit, property analyst at Absa Home Loans, says the average nominal value of small homes in February was R757 600, R1 133 900 for medium-sized homes and R1 723 900 for large homes.

A two bedroom apartment at the Waterfront in Cape Town is selling for R5.995 million through Seeff Waterfront. Click here to view.

Du Toit says single-digit nominal house price growth is forecast to continue in 2014 on the back of trends in and prospects for the economy, the household sector and related factors.

Meanwhile, data from Lightstone shows that the annual national house price inflation recorded for January was 7.87 percent and increased by about 0.45 percent from the previous month.

This increase in house price inflation was driven primarily by the major metros with Ekurhuleni growing at about 12.08 percent and Cape Town at 8.78 percent.

Lightstone notes that from a provincial perspective Gauteng continues to drive national inflation growing at just under 8 percent while property values in the Eastern Cape have been growing at a lower rate of 2.9 percent annually. - Denise Mhlanga

About the Author
Denise Mhlanga

Denise Mhlanga

Property journalist at property24.com

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