Cape Town - Record prices for some properties on Cape Town's Atlantic Seaboard are causing a frenzy among current sellers, who reject full price offers in the hope of getting much higher sale prices.
"Hype around the recent sale of a home in Nettleton Road in Clifton for R111m and the listing of a Camps Bay property for R450m has sent sellers in the area into a frenzy, prompting one to turn down a full price offer of R65 000/m² on his Clifton apartment and hike the price to R75 000/m²," explained Dennis Hamer, owner of the Harcourts Atlantic franchise.
The seller argued that there are currently only a handful of units on the market in Clifton for less than R10m.
“He believes he will achieve the higher price this summer and that his expectations are not unrealistic - and with only 269 sectional title units in total in Clifton, the market might just prove him right,” said Hamer.
Another example is a recent sale for R14.5m of a redevelopment plot in Green Point that was originally listed at R10.5m.
Even one-bedroomed apartments in Sea Point and Green Point are now frequently selling for more than R2m – which equates to R30 000/m². A 10-year-old apartment in Green Point recently sold for R58 000/m². For entry-level properties along the Atlantic Seaboard coastline the most affordable bachelor apartments are now priced at around R1.2m in Sea Point and R4.5m in Clifton.
“In other parts of Cape Town the same money can buy a substantial property, so clearly, buyers on the Atlantic Seaboard are also willing to sacrifice size for location and lifestyle, and that is another factor that continues to put upward pressure on prices here,” said Hamer.
Harcourts Atlantic is marketing what it calls a “bargain” property in Nettleton Road for R39m. Hamer said this price must be seen against land in the same street that is on the market for R55m.
“Prices here are being driven by the extremely limited supply of land between mountain and sea - and the construction of showpiece homes to rival those of other famous coastlines," said Hamer.
He said last year one could still find "a solid home" in Camps Bay for around R7m, but currently there are very few full-title homes available under R10m.
"Developers are keen to acquire those that do become available for redevelopment into upmarket sectional title complexes with two to four units,” explained Hamer.
Seeff chair Samuel Seeff told Fin24 a snapshot survey among its agents who operate across the various Atlantic Seaboard suburbs, from Green Point right through to Clifton and Camps Bay indicated that they have not seen a trend of price hikes or declined offers unless these are unreasonable.
"Rather, sellers are still quite accommodating and negotiable with their asking prices (within reason of course), especially in the top end suburbs such as Clifton and Camps Bay," said Seeff.
"While there may well have been an isolated case here and there, it is likely because the property was priced incorrectly or undervalued at the outset."
He added that the latest sales data recorded on Propstats also do not support the notion of any kind of trend of price hiking. For example, only 4 out of the 25 most recent sales have been for full asking price and these were in Green Point, Sea Point, Three Anchor Bay and Bantry Bay and generally at the lower price levels.
He said only 3 of the most recent sales in the area are recorded as achieving more than the asking price, namely a Camps Bay apartment that sold for R8.6m (+1.2% the asking price), a Sea Point apartment that sold for R2.75m (+3.8%) and a Sea Point apartment that sold for R1.98m (+1.5%).
Laurie Wener, managing director at Pam Golding Properties (PGP) in the Western Cape, told Fin24 a trend where sellers on the Atlantic Seaboard are on purpose hike prices because of the high prices obtained by other properties is the natural way of responding to consumer demand and establishing market values.
"What buyers are prepared to pay for a property establishes the market value, not the agents or the sellers at that time. Then savvy sellers will take note and base their expectations on recent sales in the area," explained Wener.
"In a rising market, where demand exceeds supply and offers tend to come in quickly, sellers may reject an offer in their quest to obtain the greatest value possible and this does happen from time to time even though a negotiating margin has been allowed for."