Recent media reports saying that the residential property market in Constantia is now gaining momentum and swinging in favour of sellers are true of the lower and middle price brackets, says Gerald Romanovsky, a Rawson Property Group resident agent with 30 years’ experience in property in the Constantia Valley, but, he says, despite some noticeable achievements recently, the anticipated recovery in the Upper Constantia market is not that evident.
The latest figures from Propstats, the Western Cape Institute of Estate Agents’ data analysis service, show that in the last six months (from 1st December 2013 to 1st May 2014) only six Upper Constantia homes in the R10 million to R15 million category have been sold – and the average achieved price here of R12,3 million was 21% below the average list price.
In the same period, however, 22 homes in the R4,5 million to R9 million bracket were sold and here the average achieved price, R6,4 million, was a respectable 9,8% below the list price.
In the R3,5 million to R4,5 million bracket, said Romanovsky, 20 homes were sold in the six month period being analysed, and the average price here was R3,981,000, which was 9,1% below the list price.
Romanovsky said that, “as most estate agents have found”, it can be difficult to get a certain minority of sellers to accept market related estimates for their homes. However if they price their home correctly in the lower price bracket, it will almost always sell within two to three weeks, while in the middle bracket (R4,5 million to R7 million), a correctly priced home will almost certainly sell in under three months.
In the R10 million plus bracket, said Romanovsky, a home will probably not sell at all unless the seller accepts that he must discount his price by 25% to 35% on the previous peak prices or 10% to 15% on the typical asking price today.
Proof however that there is still a great deal of life in the Upper Constantia market comes with the revelation that Romanovsky himself and his working partner Sandy Dicey, between January 2013 and March 2014, sold no less than 18 Upper Constantia homes valued at over R7 million, with a total value of R91 million.
Stock shortages in the lower and middle Constantia price brackets, said Romanovsky, are now every Constantia estate agent’s major challenge. The shortages, he said, have come about for two wholly valid reasons – firstly, rents have risen remarkably, making it often a better proposition to rent than to sell.
“We are seeing Upper Constantia homes able to charge R30,000, R40,000 and even R60,000 per month. This has caused people to take their homes off the market and rent them out instead. Then, too, the second reason for stock shortages is that many people have discovered that if they sell here and stay in the area they are likely to end up paying as much for their far smaller but luxurious retirement unit (quite probably in a security village) as they are paid for their current home, and this obviously can be a deterrent to a seller who previously hoped to garner a small nest egg by selling his home.”
Misunderstandings of the way in which Capital Gains Tax operates can also sometimes, said Romanovsky, hold people back from selling their homes, particularly if they have owned them for a long time.
“Take the case of a man who bought a home in Constantia 30 or 40 years ago for, say, R150,000. Today it probably may well be worth R6 million to R7 million, which he may think lays him open to Capital Gains Tax on a ‘profit’ of R4 million plus. However, the facts are that if his home was revalued in 2009 (as SARS suggested), the amount on which he is taxed will be far less. Alternatively, SARS will be prepared to apply the tax apportionment system and this too is lenient on those who have held their homes for a long time.”
Looking ahead, said Romanovsky, he is absolutely certain that “as in all markets where stock shortages are the order of the day” price rises of 6% will be experienced in the middle brackets over the coming year and 10% or 12% in the lower brackets.
“The age-old estate agent’s cry of “buy now” is therefore, in my opinion, particularly relevant in Constantia today. Those doing so will find that, in most cases, they have bought into a rising market – and even the upper market, I predict, will blossom into new life by the middle of 2015.”
