Cape Town home sells for R66 million amidst luxury housing boom

Bianke Neethling • 7 September 2024

South Africa’s luxury property market is booming, with significant stock shortages building pressure on pricing.

This is according to Pam Golding Property Group CEO Andrew Golding, who said the outlook for South Africa’s housing market is looking increasingly optimistic.

A number of positive indicators are evident, and early signs of sustainable growth in house prices and market activity are already starting to emerge.

“Repeated petrol price cuts, a seemingly imminent interest rate cut, improved confidence and the continued absence of load-shedding augur well for a continued, steady recovery in the housing market,” he said.

“We have seen both sellers and buyers, including investors, who had previously been sitting on the fence in the lead-up to the election, move forward and commit to property transactions, demonstrating that as long as there is stability, sentiment – which is a key driver of the residential property market – tends to improve.”

According to the Pam Golding Residential Property Index, national house price inflation continues to rebound, rising to 4.7% in July 2024 – a level last seen in February 2022.

The Index explained that house price inflation (HPI) in the two lower price bands below R1 million and R2 million continued to accelerate in July 2024, rising to 8.7% and 3.4%, respectively.

“While the Western Cape remains the standout performer, we have also already seen increasing activity and interest this year and during recent months in various other key metropolitan hubs and sought-after nodes around the country across all sectors, including but not limited to the high-end of the residential market,” Golding said.

“All major metro markets are showing signs of recovery, with Cape Town enjoying the strongest growth during the year to date (+2.9%), while national housing market activity has normalised and shown tentative signs of recovery in Q2 2024 as purchasers continue to buy and sell for all the usual reasons.”

In particular, Golding pointed to an uptick in South Africa’s luxury property market, which he said has seen remarkable strength and significant reduction in stock levels, which is driving a shortage of stock and in turn placing pressure on pricing.

“Confidence has returned to the property market in this segment as it is driven by positive sentiment in respect of the improved financial conditions, local stock markets and stable government,” he said.

Golding said that, in the Cape, there are significant stock shortages in the luxury market and pressure is building in pricing due to limited stock.

In the high end or R20 million plus bracket of the market, Pam Golding Properties has concluded some notable sales on the Atlantic Seaboard including:

A house in Clifton which sold to a Gauteng-based businessman for R66 million
A house in Camps Bay which sold for R33.8 million to a Gauteng-based company
An apartment in Mouille Point which sold for R27 million to a local buyer from the Western Cape

Golding explained that the lower end of the market, including first-time home buyers, is particularly sensitive to the higher interest rates currently applicable, the increases in the cost of living, and buyer affordability.

However, he said there green shoots appearing with confidence that the interest rates will soon start decreasing, and the banks remain supportive with a competitive average weighted concession at -0.56% and a record national loan-to-value ratio of 93.7% in July.

“According to ooba, national applications for first-time buyers rose to 46.6% in July 2024, rebounding from a subdued 44.3% in June, with demand likely to improve further later this year,” he said.

“This anticipated rebound in first-time buyers is likely to see stronger demand for homes around the R1 million mark in urban nodes, which typically means sectional title properties.”

Furthermore, he said mortgage applications from self-employed individuals rose to a record 13.3% in Q2 2024, and cash sales soared to a record 60.2% in Q2 2024.

The recent surge in local cash buyers has seen a sharp increase in demand for investment properties, particularly in the Western Cape.

Looking ahead, Golding said there are growing expectations that the GDP growth rate in 2025 may well surprise on the upside – which will underpin the housing market.

“The lower price bands have been the most resilient during the slowdown, so it would seem likely that the higher price bands perform better going into the recovery,” he said.

This is in part due to improved confidence, lower interest rates and stronger growth, which will see less financial pressure on homeowners to downscale and may see people who were renting commit to purchasing a home.

“More efficient local governments – resulting from the GNU – could trigger recoveries in housing markets which have previously been hard hit by poor service delivery,” Golding said.

“Johannesburg’s housing market, in particular, comes to mind, which could possibly result in a slowdown in the current semigration trend to the Western Cape.”

“We anticipate that activity will increase towards year-end as the anticipated rate cuts materialise, boosting market sentiment in general, which will underpin the emerging recovery in house price inflation.”

Below are some of the luxury homes Pam Golding recently sold in South Africa.