Upmarket homes take price hit | Business | M&G

According to FNB’s second quarter property market review, which focused on Cape Town and was released a week ago, prices of houses in the affluent suburbs of the city have been declining for a year, partly because of lower demand for houses in these areas.

For example, the FNB data shows prices in the City Bowl were down by an annual 5.7% in the second quarter this year compared to a 3.7% drop in the second quarter of 2018.Zooming out from the rich suburbs, the picture is slightly more positive. The FNB’s Economics Weekly note shows that the nationwide house price growth ticked up marginally in July, recording 3.6% year-on-year from 3.5% year-on-year in June.

“PropStats [an initiative of the Institute of Estate Agents of South Africa] indicates that from January to July this year, homes in Cape Town’s sought-after southern suburbs remained on the market for an average of 133 days compared with the same period in 2018 when homes were on the market for an average of just 57 days,” said Mike Greeff, the chief executive of Greeff Christie’s International Real Estate. The company operates in affluent suburbs such as Claremont and Newlands in Cape Town.

“What is happening now because of the political uncertainty and the economic climate, [is that] demand has dwindled down significantly and therefore it’s impacting that particular area [Cape Town] much more than the rest of the country.” Affluent areas in Johannesburg such as Sandton have dipped by 1.4% year-on-year in the second quarter of 2019 from -0,9% in the same period last year while those in parts of Northcliff slid by an annual 0.4% in the second quarter as compared with 0.9% in the same period last year.

The FNB report shows that sellers in affluent areas around the country are lowering their asking price in response to lower demand. The data shows the intensifying extent to which sellers in Cape Town are dropping their asking price — by 8.2% in the first quarter to about 12% in the second quarter.

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