Property buyers with cash on hand are snatching prime Cape Town properties from under the noses of potential bonded buyers, not giving them the chance to finalise their home loans.
In some areas, the only way bonded buyers are able to compete is by offering more than the asking prices for the homes they desire.
Most buyers in Cape Town's luxury segment along the Atlantic Seaboard are cash buyers, with a few exceptions banking within the private banking space, says Michael Bester, Tyson Properties' senior partner for this area and the City Bowl. These buyers are just as good as cash buyers, he says, adding that recently a sale was concluded in Helenslee in the V&A Waterfront where the buyer paid more than the full asking price.
"The V&A Waterfront is still very sought after with buyers regularly paying full asking price. Also in Helenslee, we recently sold a unit where the buyer paid the full asking price of R17.8 million for a 185sqm two-bedroom unit."
Bester says the Waterfront's world-class location, convenience and security drives buyer demand and attracts cash buyers prepared to pay full asking prices. The addition of the new Silo Precinct and improved lifestyle on offer has "added to the desirability of the area".
"Tyson Properties recently concluded five sales in the new Silo residential developments,where the average price per sqm is R100 000, and all were cash buyers."
Bond buyers have the best chance of competing with cash purchasers by offering full asking prices and having big deposits, Bester says.
However, although cash is "always more desirable", Rob Stefanutto, managing director of Dogon Group Properties, says this is "not necessarily the deciding factor".
He does concede, however, that in the mid-range of the market, where he is seeing the majority of competition between cash and bond buyers, cash buyers may have the upper hand.
"The mid-range properties, where there may be buyers with sufficient cash versus buyers needing a bond, cash buyers can have more leverage for negotiation on the price, particularly with sellers looking for a quick sale."
For bonded buyers, the best way to compete with cash buyers is to get pre-approval on their bonds so they know what they can spend, Stefanutto advises.
High-profile areas such as the Atlantic Seaboard boast cash sales of as much as 60% and more as wealthy buyers see these areas as strong stores of wealth, says Tony Ketcher, Seeff Properties regional general manager for the Cape.
Many other areas, such as the southern suburbs, boast cash-buying rates higher than the national average.
"The cash-buyer ratios in areas such as Hout Bay and Blouberg have also risen over the past few years. Cash buying tends to be more prevalent in the upper-income and high- profile coastal areas while lower to middle-income areas tend to rely more on mortgage finance, at least in part."
Ketcher says cash buyers also tend to be older as often they have sold existing properties and "made a good profit". This allows them to "trade up" to a better property or area.
"Most cash buyers in the high-profile areas tend to be business executives and entrepreneurs, and foreign buyers who benefit from a favourable exchange rate."
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