Friday, 17 September 2010

How Affordable is Cape Town Property?

Amid tough economic times and ongoing difficulty in obtaining mortgage finance, the importance of affordability in the housing market remains paramount.

Accessible pricing remains a major obstacle to many new entrants to the housing market, and is a crucial factor for many other buyer types, including those downscaling for retirement or wishing to upgrade to meet the needs of a growing family.

Yet affordable homes are not a myth, says Pam Golding Properties’ MD for the Western Cape metro region, Laurie Wener.

“There are a number of suburbs in the Cape Town metropolitan area where one can obtain decent, well-built homes in the R600k to R3m price range, ranging from compact apartments ideal for young couples and professionals, to larger free-standing homes. If one only knows where to look, one may be surprised by the value for money which can be obtained, and the large variety of stock which is currently on offer.”

Western Seaboard Cape Town’s Western Seaboard has long been a popular area for first-time buyers, young professionals and downscalers seeking compact, affordable homes which are easy to maintain.

In recent years as the residential area has expanded in size, so too has the offering of schools, shops, hospitals and other amenities, making these suburbs increasingly popular with young families as well.

PGP’s area manager, Ivan Swart, says there is a wide variety of affordable housing options to choose from in suburbs like Parklands, Sunningdale, Flamingo Vlei and Bloubergrant, as well as in the Melkbosstrand area further to the north.

These range from studio apartments to secure complexes and even free-standing homes. “Newer areas such as Big Bay and Atlantic Beach Golf Estate are growing rapidly in popularity with this segment of the market, and we continue to see a lot of offers from first-time buyers, older buyers downscaling for retirement, and young professional couples.

Unfortunately the limited access to mortgage finance remains an inhibiting factor, but the demand is certainly there.”

For R600k to R1m, one can obtain a two-bedroomed apartment, ideal for new entrants to the housing market and young couples. In the R1m to R2m price range, one can buy a sizable free-standing family home with three bedrooms and a double garage in Parklands, Sunningdale, Flamingo Vlei, Bloubergrant, or Melkbosstrand. This price bracket will also secure a starter home in the secure Atlantic Beach Golf Estate.

“For buyers in the R2m to R3m bracket there is even more choice, from a free-standing starter home in the Atlantic Beach or Sunset Links Golf Estates, Big Bay estates or Sunset Beach, to a two-bedroomed beachfront apartment, suited to those who are retiring or for those wanting a lock-up-and-go lifestyle.

We have a wide selection of stock in the latter category at present, with some excellent value for money on offer.”

South Peninsula

The towns of the South Peninsula also offer a number of options for buyers seeking property below R3m – and they often come with a view or even walking-distance access to the beachfront।

One can obtain a free-standing three-bedroomed home in Kommetjie for under R2m, or a cottage in Scarborough for R1,25m.

PGP’s area manager Sandi Gildenhuys says there are also a number of homes in this price range in Fish Hoek. “One can obtain a one- or two-bedroomed apartment in central Fish Hoek for just R500k to R600, while most free-standing homes in the valley sell from around R850k to R1,4m.”

Mountainside properties commanding panoramic views are a little pricier, but still a very affordable R1,8m to R3m. The town has always been popular with retirees due to its lovely flat and easy-to-access beachfront, but is also attracting young families and even professionals who commute into town.

Towns like Kommetjie and Noordhoek are also attracting increasing numbers of young families who are choosing to raise their children in a more rural environment, and who want affordable, sizable family homes.
Southern Suburbs
Cape Town’s leafy Southern Suburbs are widely perceived as offering quality family homes on large plots, located close to the University of Cape Town and a number of top schools. The reputation is fully justified, and such homes frequently come with substantial price tags.

But, says PGP’s area manager Howard Markham, it would be inaccurate to think that the Southern Suburbs are out of range of smaller budget buyers. “There are a number of options for entry-level buyers and young couples wanting to obtain a foothold in this sought-after market, and even for family buyers needing larger homes.

“Suburbs such as Observatory, Claremont, Kenilworth and Pinelands offer plenty of homes priced under R3m, as do Bergvliet and certain pockets of Tokai. One can still obtain a three-or four-bedroomed home on up to 800sqm, within this range.

And Harfield Village, for example, is growing steadily in popularity with first-time buyers and young couples without children, who love its manageable-sized plots, attractive homes and central location. One can buy a four-bedroomed home with a double garage here for R2,35m.”

Markham says there is also limited activity in the investor market under R3m at present, mainly from parents buying sectional title units for their student children.
Atlantic Seaboard and City Bowl

The growth of residential opportunities in Cape Town’s Central City has opened up many new options for entry-level buyers and those seeking homes under R3m.

One can obtain starter apartments in the heart of the business district for around R500k for a bachelor unit, or R1m to R2,5m for larger two-bedroomed options. These are extremely popular with young professionals working in the city, and are also considered by investors due to the rental returns they can command.

Those wanting to live close to the sea might consider Mouille Point, where one can still obtain a one-bedroomed apartment from R1,25m. And in neighbouring Green Point, bachelor flats are priced from around R500k, while larger two-bedroomed units can be obtained for closer to R2m.
Although more upmarket areas of the City Bowl, such as Oranjezicht and Vredehoek, tend to attract higher prices, it is still possible to obtain older homes in these areas for under R2,5m, says PGP’s area manager Basil Moraitis – if one has the budget and willingness to carry out renovation work.

Lanice Steward, MD of the Cape Peninsula estate agency Anne Porter Knight Frank (APKF), says the emerging middle class will boost prices in the traditional Cape suburbs.

“Anyone buying for investment purposes in the Cape Peninsula right now will be onto a sound investment no matter which suburb he chooses,” said Steward.

“The reason is clear: with a mountain and a nature reserve taking up 65% of the available land, property in the traditional Cape suburbs will increasingly be in short supply. It is in these traditional suburbs that the emerging middle class aspire to live.

“This does not mean that Cape Flats suburbs like Grassy Park, Mitchells Plain and Ottery will not gain in value, but areas like Lower Wynberg, Rondebosch East, Diep River, Retreat, Goodwood and Sea Point, which are still low priced are set to take off.”

The best long term prospect, and the one she would tip to any person looking for a lifestyle as well as a sound investment, said Steward, is Simons Town.

“With commuting problems hitting the outlying areas, the convenience of a comfortable 53 minute train ride to the city is increasingly appreciated. Add to that a charming Southampton-type main street, good restaurants, a flourishing yacht club, a challenging golf course (currently in near-perfect condition), a lively cultural life and wonderful mountain walks and minimal crime, and it is quite clear that a decade from now Simons Town will be the place to live.”

This fact, said Steward, is already recognised by buyers who can expect to pay anything from R2,5m to R4m for a standard three bedroom house, but who are still able to find bachelor pads below R1m while at the upper end of the price range there are many homes priced in the R10m to R20m bracket. – Eugene Brink

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