The South African city where houses often sell for over R50 million

Cape Town’s luxury property market remains strong, with several sales exceeding R50 million and over R3.3 billion in sales concluded, as house demand across the country is expected to pick up once interest rates come down.

This is according to Seeff Property Group chairman Samuel Seeff, who told Daily Investor that the South African Reserve Bank’s (SARB) latest interest rate cut was too small to make a noticeable impact on property demand.

This comes after the SARB’s Monetary Policy Committee (MPC) cut interest rates by 25 basis points at its last meeting in September – South Africa’s first rate cut in years.

This cut brought the repo rate down to 8% and the prime lending rate down to 11.50%.

“An interest rate cut is always good news for the market, and many urban areas, especially the low to mid-priced segments, i.e. those below R2 million, are seeing an increase in buyer activity due to the rate cut, but also because the warmer months tend to encourage more buyers,” he said. 

“That said, we are not anticipating any notable uptick, the rate cut was too conservative for that.” 

He said Seeff remains of the view that the interest rate is still too high and that the recent rate cut was too small—it should have been at least 50 basis points. 

“We hope to see another cut in November to really impact consumer wallets, the economy, and the property market,” he said.

However, he said that following the interest rate cut, Seeff’s branches are seeing an improvement in the overall sentiment and there is an air of expectation that inflation and the petrol price should continue to decline. 

With the exchange rate remaining under R17.6 to the US dollar, Seeff sees an opportunity for the Reserve Bank to cut the rate again next month. 

“The economy desperately needs a rate cut, especially as we head into the busy retail season,” he said.

When it comes to property pricing, Seeff said it is important for sellers to note that it is not yet time to hike their prices. 

He explained that the uptick in buyer demand is simply not enough to induce the level of competition that the market would need for notable price hikes.

He advised sellers to take advantage of the current demand by continuing to price their properties correctly for the market. 

“Buyers decide on the prices that they are willing to pay, and if the property is priced above the current market level for the area, sellers will unfortunately lose out to other competing properties,” he said.

While the price growth outlook may slightly improve, the overall sentiment is that it will remain fairly muted until the interest rate is significantly reduced. 

“We would like to see the rate return to the pre-pandemic level of around 10% (prime rate) for a more meaningful impact on the property market,” he said.

“Insofar as the broader market outlook is concerned, we expect the market to remain fairly on par with last year. We would like to see an improvement, which can be aided by another rate cut.”

Regardless, Seeff said his company continues to see the market as offering good value and would encourage buyers to take advantage of the current market. 

Any notable improvement in the market will undoubtedly mean that prices will start picking up to a more pronounced degree, which will mean that buyers will have to pay more. 

“The market has bottomed out, and buyers should get in now before the market takes its next upswing,” he said. 

“Once more buyers enter the market and stock levels reduce, it will be more favourable to sellers to look for higher prices.”

Interestingly, the licensee for Seeff Atlantic Seaboard, Ross Levin, said the Cape Town luxury property market continues at pace with over R3.3 billion in sales, including several concluded over R50 million.

The lead agent for Seeff Southern Suburbs Uppers, Francois Venter, added that upper-end sales above R20 million are not just hot sellers on the Atlantic Seaboard but also in suburbs like Constantia and Bishopscourt.