Swings and roundabouts - optimising the nature of the real estate market

For many it's becoming increasingly difficult to feel positive about the property market which has slowed considerably since 2017 with a significant dip in sales and prices but, as often said, every cloud has a silver lining and, however elusive that glimmer of hope might sometimes be, it's always there. 

Chris Cilliers, CEO and Broker Principal for Lew Geffen Sotheby's International Realty in the Winelands, believes that not only is the current market far from being all doom and gloom; it is, in fact, the perfect storm for anyone wanting to build their dream home.

"In the Winelands, we have seen a notable drop in the sale of plots and building of new homes, especially in estates, when this is actually the time when investors should be making the most of the buyer's market.

"Not only are banks very keen to lend for the first time in ages with many offering incentives, buyers now also have better leverage than they've had in many years to negotiate the price of land as well as the building costs."

She adds that the fact that there is still considerable commercial building happening around the country means that big business confidence is still strong which is always an encouraging sign.

Jill Lloyd, Veteran Area Specialist in Lynfrae, Claremont and Rondebosch, says the fact that the local building industry, a foundation of the economy and also South Africa's largest employer of unskilled labour, is currently under such pressure is cause for deep concern.

"A growing number of key companies are coming under pressure with a number of others moving off-shore."

However, she adds that we also need to remain pragmatic and retain a realistic view: "Although there have certainly been extenuating influential factors like the water crisis, political instability and the land expropriation issue hasn't done much to stimulate the market, we mustn't forget that the property industry always works in cycles.

"There are upswings and there are price correction phases and right now we are in the latter - it was inevitable, after such a growth period. And, as Cape Town's growth was considerably higher than in other metros, our recovery is bound to be slower.

"And, although the marked decline in sales and pricing in high-profile areas like the Atlantic Seaboard is often widely publicised, further fuelling investor nervousness, these markets operate autonomously in many ways and aren't truly reflective of what is happening generally."

Lloyd adds that the current market is also the ideal time for those who want to upgrade to larger or better accommodation. 

"The lower end of the market remains active in most areas so there is still the possibility of a good the sale. Timing the bottom of a market is always difficult but I feel that it is definitely bottoming out now and investors should seize the day."

Tycoon Warren Buffet sagely said that the best time to buy is when others sell, and the best time to sell is when they are buying and this holds very true for the real estate market.

This downturn has seen many markets heading back to 2008 prices and, when you subtract 10 years' inflation, it translates into a fantastic investment opportunity.

"But, as always, it's a brief window of opportunity as the market always swings up again and those who do not take advantage will be kicking themselves in the not-too-distant future," concludes Cilliers