Resilient Plumstead market hampered by investor caution and unrealistic pricing

Long the unassuming and often overlooked wallflower of the Southern Suburbs, Plumstead has been attracting growing investor interest in recent years, especially since the bubble burst three years ago.

It offers great value in a high value area and is especially popular with young families who want a garden for their kids to play in. So, despite the prevailing climate, agents are still receiving an encouraging number of enquiries. And when properties are correctly priced, they are snapped up - as evidenced by one agents three quick sales last month, one apartment sight-unseen.

However, despite encouraging buyer interest, enquiries aren't translating into as many sales as one would expect for a number of reasons, including the fact that increasingly savvy investors are not willing to pay more than real market value - and many are also waiting for the election outcome. And exacerbating the problem is the fact that a number of sellers are still adamantly sticking to their higher price expectations.

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Resilient Plumstead market hampered by investor caution and unrealistic pricing

Although the Plumstead market has incontrovertibly held its own with steady sales volumes and consistent sales prices over the past two years, many agents believe that the suburb's potential in a progressively slow market is being suppressed by unrealistic pricing and an overly-cautious sentiment.

So says Audrey Chandler, Freehold Area Specialist for Lew Geffen Sotheby's International Realty, adding: "Several years of double digit growth in Cape Town has priced many areas out of the market for first time buyers and young families, with few accessible options remaining, especially in well-situated, established suburbs near good schools and amenities.

"Which is why Plumstead, with its characteristically spacious houses, sizeable plots and accessible prices, has become increasingly popular and is now one of the most sought-after areas in the Southern Suburbs.

"However, in the current buyer's market with political uncertainly muddying the water's, pricing is key and we are finding that the keen interest doesn't translate into as many sales as often as one would expect."

She attributes this to a number of factors, including increasingly savvy buyers who are looking for good value, many of whom are waiting for the outcome of the election before investing. And there are also still a number of sellers who remain reluctant to adjust their pricing expectations, often accepting the highest valuation which then has to be readjusted later, wasting valuable time and deterring serious buyers.

Claude McKirby, Southern Suburbs Co-Principal for Lew Geffen Sotheby's International Realty, says that an analysis recent Lightstone data clearly demonstrates Plumstead's resilience - and indicates its potential.

"By 2017, median sale prices in most suburbs in Cape Town had begun to notably decline, but in Plumstead it was still on the rise with freehold and sectional title median prices increasing from R2 million and R952 000 in 2016 to R2.34m and R1.15m respectively.

"They continued their upward trajectory last year, with the median house price rising further to R2.4m and apartments to R1.22m. However, this year, although enquiries have remained steady, the cautious sentiment ahead of elections is evident with median house prices hovering and sectional title median prices inching up fractionally."

Sectional Title Area Specialist for the group, Barbara Andrews, says that demand for apartments has remained consistently strong and, if correctly priced, they are usually snapped up very quickly.

"Last month I sold three apartments, one of which was bought sight-unseen by a investor, with prices ranging from just under a million to R1.4m. Buyers are especially keen to purchase unrenovated apartments at the moment, most of whom want to renovate them for the rental market.

"Although many buyers have adopted a 'wait-and-see' attitude, others are taking advantage of the wide property choice currently available and the market conditions to take the plunge and secure a good deal."

Other than well-priced apartments, Chandler says that there is also strong demand for homes that accommodate dual living or properties that can be converted. 
"The comments we are receiving from purchasers are that elderly parents are more vulnerable nowadays and they therefore prefer to have them living in a safer environment within the family unit."

"Plumstead has become a very vibrant suburb in recent years," says Andrews, "with more and more young families and up-and-coming professionals moving into the area and buying the homes that the older, existing residents are selling in order to downsize or move to retirement homes.

"According to Lightstone, 35% of all recent buyers were aged 35 or younger with 31% falling in the 36 to 49 age group."

McKirby concludes: "The suburb offers them myriad draw-cards, not least the fact that it is home to three primary schools, a high school and several crèches, as well as being in close proximity to many of Cape Town's best schools including Bishops Diocesan College, Herschel Girls' and Wynberg Schools' campuses.

""Plumstead also offers easy access to the M3 and M5 highways with the CBD being just a 20-minute drive and residents have a choice of top class shopping malls, restaurants and sports and leisure facilities, and the False Bay beaches and Constantia wine estates are only a short drive away."