Luxury home prices are static or declining in many of SA's most sought-after suburbs and sellers are much more willing to negotiate, according to Rory O'Hagan, head of the Luxury Portfolio division of the Chas Everitt International property group.
He says recent FNB statistics show that the rate of home price growth on the Atlantic Seaboard, which is SA's most expensive area, has fallen from a high of 25.5% in the first quarter of 2016 to -5.1% in the first quarter of this year.
House prices in Cape Town's Southern Suburbs, including areas like Constantia, Bishopscourt, Newlands and Claremont are currently declining at the rate of 2.4% a year. This was after reaching a peak annual growth rate of 15.4% in 2015.
"Meanwhile we have seen many sellers in Johannesburg's top suburbs and luxury lifestyle estates all around the country reduce their asking prices in recent months. In Hyde Park, for example, brand new cluster homes that were for sale at R28m are now priced at R20m, and a home that was originally listed for R19m is now available for R15m," he said.
"Our Luxury Portfolio teams in estates such as Val de Vie in the Cape Winelands and Zimbali on the KZN North Coast report a similar trend, with asking prices on specific homes dropping in the past month from R16.9m to R13m; from R15.9m to 12m; and from R13.9m to R11.5m."
Rather than being a cause for alarm, the current period of price correction which has seen a softening of house prices in the Western Cape, should be seen as a “window of opportunity” to buy property in this highly-sought after market, according to Pam Golding Properties.
Particularly on the Atlantic Seaboard, which for almost five years had enjoyed double-digit growth, the recent deflation of house prices is not only expected, but also welcomed as it opens up this desirable market to more buyers, according to Basil Moraitis, Pam Golding Properties area manager for the Atlantic Seaboard and City Bowl.
“Sustained house price growth set the Atlantic Seaboard apart from the rest of the country in terms of performance. But now, we are seeing this market recoupling with the rest of the country, in line with affordability, which creates ample opportunity for the savvy investor.”
During the year to date, Western Cape house prices have increased by an annual 6.75%, compared with the national house price inflation of 3.76%, according to Lightstone property data.
"Over and above this, we are also seeing an increase in top-end sales over R20m, which demonstrates increased confidence in the local residential property market," says Moraitis. Atlantic Seaboard sales over the past month, valued at R64m, have included the R9m sale of an apartment in Green Point and a six-bedroom home in Camps Bay, for R20m.
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According to Ross Levin, director for Seeff Atlantic Seaboard and City Bowl, there is a growing trend of hotels selling apartments to assist in their funding model. Top end hotel suites are generally priced upwards of R6m to R35m and more, depending on the hotel brand.
The most exclusive of these, in his view, are located in the One&Only at the Waterfront, comprising of three luxurious penthouses with private pools and views that have sold for up to R110m a few years ago.
Hotel suites at international hotel brands in Cape Town have sold at the Taj Hotel for up to R6m and the Radisson for up to R18.5m. Local hotel brands include 15 On Orange (sold for up to R11m), Cape Royale (sold for up to R4m) and the Pepperclub.
Security, access to hotel amenities and services with luxury living are part of the attraction.