The Current State of the Market - April 2019
Category From the Director
The Blouberg residential sales market in 2018 saw a gradual decline in volume and value when compared to 2017. This however does not mean the area is inactive, rather an indication of the national sentiment around the impact of the macro outcomes over 2018. The make-up of the area which is predominantly a buy to live market, has a varied price range and covers the full price spectrum, whilst it fluctuates in activity, from entry level first time purchasing to luxury market selling. The Market remains relatively active in comparison to the rest of the peninsula.
The hardest hit segment of the market was the luxury segment (luxury defined as properties above R10m) where buyers and sellers were reluctant to trade. Opting for the "wait and see what 2019 may bring" approach. Expectations are for this segment to release post elections as there has been a long wait with buyers becoming increasingly frustrated with the status quo. We have seen an increase in purchases above the R5m mark this year, and we believe that the prudent buyers have opted to "get into" the market whilst it remains relatively flat rather than pay a premium when the market recovers.
This bodes well for the growth of the area as this sentiment should trickle-down into the more active segments below R2.5m.
The first two months of 2019 has brought with it a more positive feel, fortunate, the recent load shedding schedules and impending elections may stint activity for a while. Those are short term negatives that tend to slow activity down but, buy to live remains the primary driver and for this reason I believe this slowing will ease as we enter the colder winter period of the year.
Taking into consideration the macro state of the market, the area continues to trade well above the norm, with R140m per month in turnover, predominantly driven by the buy to live needs of the area. There has been a substantial release of stock in 2019, however, the largest portion of the active market remains below the R2.5m mark. This may be indicative of a strong first-time buyer or younger generation buyer remaining active through the downturn.
Lifestyle change has been a strong driver, however, sellers who are looking to downscale or upgrade due to their lifestyle needs. Tend to over price in order to replace that which they have, resulting in longer selling times. Buyers continue to shop by comparison, resulting in extended negotiations and fewer sales achieving 100% of the asking price.
Pricing in this environment matters as buyers are spoilt for choice and shop by comparison. The majority of the buying activity remains with clients younger than 35 and sellers above 35. This is an indication of younger, qualified professionals chasing a lifestyle purchase close to good amenities and the Cape Town Coast. Blouberg remains a demand area given its proximity to the CBD with the sea and its many good schools.
I am of the opinion that the area will remain buoyant through 2019. Enjoying stronger than average growth as the area remains well priced for what's on offer.
Author: Clinton Martle
