A Faltering Seller’s market

The Cape St Francis Property market has moved into what can be categorised as a faltering Seller’s market which is a continuation of the bumpy recovery phase we have been experiencing since 2010 and the slowdown in the 2nd home market. This is reflected by the drop in sales of property during 2019 when compared to 2018. The number of property sales per year in Cape St Francis increased steadily over the 2016, 2017 and 2018 with 68 properties being registered during 2018 – dropping to 44 properties in 2019 – the biggest drop being in sales of plots partly due to the lack of entry level plots being available! What is also notable is that the average price of freehold developed properties increased steadily since 2010 (apart from a small hiccup in 2015 and then bouncing back in 2016) topping out at R1.675 million on average in 2018 but dropping back by around 2% in 2019 (Source – Lightstone Property).

High end Sales and Developments Taking Place:

A number of high-end sales of R11+ million for beach front properties have been concluded and many high-end homes have been built in Cape St Francis in prime locations fronting both the beach and the rocky coast over the past 8 years.

The injection of this sort of capital into Cape St Francis is raising the price bar of prime Cape St Francis Properties – and with a world class beach and a limited supply of property – prices are likely to continue to grow at a level which outstrips inflation despite the current slowdown in sales.

It is a known investment trend that during periods of economic & political uncertainty and market volatility (which has been prevalent through 2019 and the start of 2020), individuals often become more cautious about their investments, which results in investors seeking out property which, although less liquid, provides more stability to an investment portfolio.

Even although Cape St Francis is a 2nd home market – research we have done has shown that a well selected property in Cape St Francis has outperformed inflation and has generated a better return than the average for equities.

Entry Level Houses & Vacant Plots in High Demand but Middle of the range Sales Remain Slow:

We had seen an increasing demand for plots with sales registered moving from only 2 plots in 2010 gradually increasing to 15 in 2016, topping out at 24 in 2018 & declining to only 8 in 2019. We have moved from an oversupply of plots to a lack of supply and prices have firmed and increased in selected areas of Cape St Francis – particularly in the central area on the seaside of Da Gama Road and fronting the Rocky Coastline. 

The same is true for improved properties in the R1 million to R2.5 million range – demand has steadily increased and currently there is a lack of stock in this price range compared to mid-2017. 

There is less demand for properties in the mid-range of R2.5 million to R4.5 million with comparative properties in Santareme & St Francis Village offering far better value for money when directly comparing the improvements and buyers/investors are struggling to comprehend this. It is clear that due to the limited supply factor in Cape St Francis property (see below) plus the lower crime statistics, prices are holding up far better than areas such as Santareme and prices for plots and improved properties are reflecting this. 

A Slow Recovery Predicted:

We have certainly come off the lows of 2007 to 2010, but as predicted, the recovery of the property market has been a slow and bumpy road with house price growth (with the exception of Cape Town, the KwaZulu Natal North Coast areas, Soweto & some other pockets) being largely below the inflation rate for most of the past 10 years. The current State of Disaster in South Africa due to the COVID19 Virus Pandemic, is going to further exacerbate the 2nd home market in South Africa and particularly coastal resorts like Cape St Francis. The uncertainty is already having an impact!

Whilst the market remains sluggish, we are encouraged by the low level of listings – with less than 4% of total stock on the market and very few distressed sellers – property prices being achieved have moved upwards for prime property and sales are taking place much closer to the listed prices compared to a couple of years ago. This is due to a combination of sellers being more realistic about listing prices and the slow recovery in the property market.

Availability of Property to Purchase in Cape St Francis:  this remains limited when compared to our cousins, St Francis Bay or to our distant relative, Jeffreys Bay.

There are a limited number of properties in CSF [800], a factor which is unlikely to change due to the area being surrounded by nature reserve and protected green areas. In addition to this, Cape St Francis tends to be less of a speculative market than St Francis Bay, meaning that owners of property are less willing to sell properties in this area having bought because of an emotional tie to childhood holiday memories or a desire for a particular kind of lifestyle offered by this laid-back area. 

The successful buyer in Cape St Francis learns that one is unlikely to find the property, in the condition one wants, in the area of Cape St Francis that one wants and at a desirable price. With many rustic type holiday homes, it is wiser to choose the location that appeals and then to be prepared to work with the property that offers this.