South African Property Market Expects an Up-turn

If the experts are to be believed, South Africa’s property market could be on the verge of an upswing, which is good news for all those home owners who have been trying to unhand perfectly reasonable properties at perfectly reasonable prices for the last 12 months or so. Of course, most of the optimism surrounds "big-ticket home sales", in other words the really expensive houses and not properties more suited to the middle-class pocket.

According to Lew Geffen, chairman of Sotheby’s International Realty in SA, South Africans (and foreign investors) have adapted their outlooks to cope with all of the bad news from 2008, including the Eskom blackouts and Zimbabwean crisis and have started getting on with their lives again. And for the affluent that means a return to exorbitant spending, especially on property.

Property prices in upmarket areas in the Gauteng and Western Cape provinces have proven to be especially robust topping R40m (+/- $4m) and R100m (+/- $10m) respectively. The Western Cape’s Atlantic Seaboard (the coastline between the Atlantic Ocean and Table Mountain) is one of South Africa’s most sought-after and expensive property market. The average property price is R4m (+/- $400,000), and while Barak Geffen, executive director of Sotheby’s International Realty South Africa, says that the number of properties advertised has decreased, prices have actually increased. This, according to Barak Geffen, is because more high-priced properties have been sold, which skews statistics somewhat.

For instance, a waterfront property was sold for R110m ($10.1m) in December and properties worth R24m ($2.4m) were sold in Clifton, Granger Bay, Camps Bay and Bantry Bay in the last quarter of 2008. Barak Geffen says, "Astute buyers have been waiting for a market correction to pick up top end properties from realistic sellers at market related prices in order to gear up for the next upward cycle in the market."

Ian Slot, managing director of Seeff Atlantic Seaboard, City Bowl, CBD and V&A Waterfront, says that Clifton is generally considered to be South Africa’s most prestigious and luxurious property market, owing largely to the white beaches, sea and mountain views and "excellent micro-climate". Houses go for anything between R25m ($2.5m) and R80m ($8m). Studio apartments start at R1.5m or R2m ($200,000), while deluxe apartments sell for around R50m ($5m). A single garage even went for R2m.

According to Lew Geffen, one of the reasons for the turnaround in the property market is the fact that fewer South Africans are emigrating and are instead choosing to settle down and invest in SA. In addition, many expats are returning to SA from the UK, Europe and Australia and are bringing their foreign exchange with them. Not only that, but owing to the fact that the property markets in the UK, Europe and the US are still stagnant, foreign investors are turning their attention to SA, where their foreign currency will get them value for money and where the risk is considerably lower than at home. Even previous concerns, such as high crime rates and political unrest in the region, no longer deter foreign investors.

Lew Geffen says that it appears as though the South African property market has bottomed out and an upturn is in sight.

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