Somerset West’s property market is renowned for its resilience, but the last few years have delivered some unprecedented challenges. Schalk van der Merwe, franchisee for the Rawson Properties Helderberg Group, shares his insights on how circumstances have affected the market, and what buyers, sellers, landlords and tenants can expect as they navigate local property, today.
Subdued price growth
“The average property value in Somerset West has been hovering around R2.5million since 2017,” Van der Merwe begins. “This has caused a lot of concern from homeowners who had hoped to see higher growth based on historic performance. While we’d obviously like to see these figures increasing, it’s important to acknowledge just how impressive this resilience actually is – particularly when compared to the property price deterioration experienced in other parts of the country.”
Van der Merwe also points out that average price growth does not paint a complete picture of market activity. Each of Somerset West’s 67-odd suburbs have their own, unique growth patterns, as do the individual properties within them. As such, homeowners are strongly advised not to base any property-related decisions on average statistics, instead taking advantage of the free professional valuation and advisory services of an experienced estate agent.
As for the reasons behind Somerset West’s subdued property price growth, Van der Merwe says declining market activity holds the lion’s share of blame. Property sales have dropped by 38% since the catastrophic drought in 2017, leading to a persistent oversupply of properties on the market.
“Somerset West has a total of just over 24 000 properties, and 6.08% of those – around 1 400 properties – are currently for sale,” he says. “Given that we only had 939 second hand property registrations in total during 2020, it’s safe to say that demand is lagging behind supply.”
While seemingly dire, Van der Merwe says stock levels have actually decreased by 13% in the last 3 months, proving that the combination of affordable finance and excellent value on offer is enticing buyers back into the market.
“Properties under R3.75 million, in particular, are now selling very quickly,” says Van der Merwe. “If your listing is in this price range and you haven’t received any offers, it’s time to re-evaluate your market strategy. Properties over R3.75 million, on the other hand, remain very sensitive, requiring careful handling and the correct marketing strategy to achieve successful outcomes.”
Decreasing rental availability
The previous oversupply of rental properties also appears to be decreasing, with a 21% decline in availability. This, Van der Merwe says, is a healthy sign that should lead to price recovery.
“Our greatest demand is for rental properties between R5000 and R10 000 at the moment,” he says, “but even in these high-demand brackets, it’s important to focus on tenant retention over rental growth for now. I strongly recommend investors stay open to negotiation and seek advice from a property professional to keep loyal and good paying tenants in place for as long as possible.”
Declining online activity
Despite the increasing necessity of online marketing caused by COVID-19, Van der Merwe says online views of listings have dropped by 30% over the last few months.
“This is an unexpected and concerning turn of events which we will be monitoring closely,” he says. “Together with inventory levels, it will be a valuable indicator of changes in demand and supply.”
Knowledge and agility remain key
If the last few years have demonstrated anything, it’s that even small fluctuations in the social, political and economic climate can have a profound impact on the success of buyers, sellers, tenants and landlords on the property market.
According to Van der Merwe, the best way to overcome these challenges is to arm yourself with as much knowledge as possible and prepare to adapt to changing circumstances quickly when necessary.
“A good real estate agent with their finger on the pulse of macro and micro market influences is an invaluable partner in this,” he says. “There’s simply no substitute for their hands-on experience and razor-sharp instincts in times like these.”