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Winelands sales slower in 2017 but house price growth only wavered
Category Property News
After an exceptionally good 2016 during which the Winelands residential market outperformed the national average by a considerable margin, 2017 was marked by a difficult winter with a notable slump in sales and demand.
This is according to Chris Cilliers, chief executive and principal for Lew Geffen Sotheby’s International Realty in the Winelands, who says that the decline can largely be attributed to the political turmoil earlier in the year as well as the economic fallout which further affected home affordability and investor confidence.
“The Winelands towns all experienced the same challenges last year, although demand in Stellenbosch didn’t drop off quite as much as in the other areas and stock shortages were still felt in certain sectors, especially at the lower end of the market.”
Lew Geffen, chairman of Lew Geffen Sotheby’s International says that the current Lightstone reports for 2017 clearly demonstrate the market downshift in the Winelands towns.
“In Stellenbosch there were 406 freehold and 307 sectional title registrations last year compared to 492 and 507 the year before.
“Paarl saw the most dramatic drop in the number of freehold registrations last year, from 1 381 in 2016 to just 532 last year, with 165 sectional title registrations compared to 190 in 2016.
“However,” says Geffen, “although sales volumes were notably lower, prices did continue to increase, albeit at a lower rate than the previous year.”
“In Stellenbosch the average sale price of houses and apartments during the last three months of 2017 was R3.37 million and R1.7m respectively compared to the annual average price of R2.98m and R1.58m.
“In Paarl, the annual average sale price of houses and apartments also increased during the fourth quarter of 2017, from R1.68m and R545 00 to R1.79m and R581 000 respectively. Only estates showed a slight drop in average sale price in the fourth quarter.”
Cilliers explains: “The upper end of the market was hardest hit in 2017, showing the least price growth and the biggest dip in sales with a marked decline in demand for properties priced above R8m. There is currently quite a lot of stock available, particularly on the estates, so the competition is strong.
“Fortunately, we did see significant overall improvement in the last quarter of 2017,” says Cilliers, “but overall the figures will definitely be lower than for 2016.
“That said, well-maintained, well-priced stock in sought after locations still sell quickly, however over-priced homes do remain in the market longer and sellers usually have to consider offers to sell. Buyers are no longer paying above market value for homes in the high demand areas as they did in 2016.”
The sectional title sector in the Winelands is relatively small and in Stellenbosch and Wellington it is driven by the student market. However, in spite of the ongoing demand for student accommodation, this market has also felt the pinch.
Cilliers says: “There was quite a lot of student accommodation released into the market at year end when leases finished, however, we are now seeing sellers withdraw their properties to place them back on the rental market if they have not sold by January.”
Although the rental market in the Winelands has remained strong, Cilliers says that tenants are no longer willing to pay whatever rental price the landlords are charging and many are now negotiating on price.
“However, there is definitely more stock available at the moment and this inevitably puts downward pressure on rentals.”
Cilliers concludes: “We need a stable political and economic environment which is investment driven and boosts confidence in the country. If the positive results of the ANC conference manifest soon, we believe that we can have a good year. We need a sustainable long-term solution for the water crisis and other infrastructural issues in the Western Cape.”
Author: Lew Geffen Sotheby's International Realtys International Realty