For several years, the robust Winelands market and estate development in the area were notably buoyed by upcountry buyers looking to relocate, but those sales have slowed considerably since 2017 and, although estate homes are still popular, buyer demographics have changed.
According to Chris Cilliers, CEO and Co-Principal of Lew Geffen Sotheby’s International Realty in the Winelands, they have been seeing an increase in the number of first-time buyers who have been taking advantage of the good deals available and the eagerness of banks to lend.
“The lower and middle-price ranges are really benefitting from the great offers that the banks are promoting and the recent price adjustments which are enabling buyers to enter previously inaccessible markets.
“We are also fielding a significant number of enquiries from international investors about residential property in the Helderberg and Winelands commercial farms.”
Cilliers says that, like everywhere else, the market in this sought-after node continued to be beleaguered by the ongoing political and economic pressures last year but it was certainly not all doom and gloom.
“The best way to sum up 2019 is ‘sluggish with pockets of excellence’ because although sales were notably down on the previous year, the bullish buyer’s market with high stock levels has also provided excellent investment opportunities, especially for cash buyers.”
An analysis of Lightstone data reveals where investors have been putting their money and which properties have fared best.
In Stellenbosch, the annual average house price of R3.294 million dropped to R2.724m in the last three months of 2019, while the average estate home price rose from R3.439m to R4.254m between October and December, with 33 of the 139 sales occurring during this period.
Cilliers attributes this to largely to the looming new school year and increased activity and competition for certain properties close to the good schools, with the most popular being secure estate homes.
“The sectional title sector has remained fairly consistent as it continues to be driven by the student market and where investors have seen bargains, they have taken advantage so well-priced flats are still being snapped up, especially those in close proximity to the university.”
Also supported to some extent by the student market, Wellington’s growing sectional title sector remained stable in 2019, with the annual average sale price only dipping fractionally during the last three months, from R629 000 (53 sales) to R614 000 (16 sales).
The estate sector was also fairly consistent and between October and December, the average sale price only dropped by R22 000 from R1.473m (96 sales) to R1.451m (39 sales).
“Wellington has been a very popular market due to the great value for money that it offers in a high-value region, says Cilliers, “along with easy access to the business hubs of the Northern Suburbs, Stellenbosch and Paarl.”
In Paarl, freehold homes were the star of the show last year with average house prices rising significantly during the fourth quarter, from R1.677m (337 sales) to R1.94m (81 sales).
Cilliers says that the rental market has remained strong with high demand, however it has also seen increased stock which has meant that rental prices haven’t risen as before.
“Commercial properties are also offering quite a stable investment in the Winelands, depending on location and facilities, with business parks in Stellenbosch and Paarl, generally offering the best returns.”
However, despite the encouraging highlights in a difficult market, Cilliers remains very cautiously optimistic.
“Unfortunately, the property market is very dependent on political and economic influences and 2020 has not started well, with the spotlight firmly on Eskom’s woes and the issues at SAA, Prasa, Edcom and Massmart to name but a few.
‘The buyer’s cycle should really be in full swing now and driving the market towards the next seller’s cycle but these issues create hesitancy and this is keeping a brake on the market.
“The next 12 months will be critical for our economy and future and we can only hope that the powers-that-be make the right decisions.”