The higher for longer interest rate environment may have deterred some of South Africa’s would-be homebuyers, but seemingly not the lucky 1% – with properties in the R10 to R100 million price bracket in high demand.
Despite high price tags and smaller buying pool, estate agents surveyed in the latest FNB Property Barometer felt more confident about selling luxury properties in excess of R3.6 million than they did selling properties priced between R750,000 and less than R3.6 million.
The luxury capital of South Africa
It’s no surprise that Cape Town, South Africa’s luxury property capital, accounts for the majority of the country’s high-end real estate sales with over 50% of million-dollar homes are concentrated in prestigious areas such as Bantry Bay, Bishopscourt, Camps Bay, Clifton, Constantia, Fresnaye, and Llandudno.
Ranked in the top five of Knight Frank’s Prime International Residential Index (PIRI) among the likes of Dubai and Manila, Cape Town attracts both local and international buyers because of its unmatched value for money lifestyle (in comparison what you can get for the same price in the likes of New York and Paris).
And while majority of purchases in Cape Town are by South Africans, it is estimated that as much as 32% of sales went to international buyers from the likes of the US, the UK, Europe, Middle East and Asia in the first quarter of 2024 – a staggering number which could be responsible for some of the big price tag sales that the market has experienced in 2024.
Who are SA’s wealthy homebuyers?
The relative ‘affordability’ of South Africa’s luxury properties is not just limited to those with foreign currency to burn. According to SARS, 4.6% of taxpayers are high-income earners, cashing in more than R1 million per year, equating to eligibility on a bond of R3.5 million-plus.
Surprisingly though, it is still Johannesburg, and not Cape Town, that is home to the highest number of millionaires on the African continent. These HNWIs primarily reside in Johannesburg’s Northern Suburbs, with the neighbourhoods of Sandhurst, Hyde Park, Inanda and Westcliff in particularly high demand.
Looking ahead, I believe that as interest rate cuts start to come into effect, more buyers in the price bracket of below R3.5 million will start to ‘buy up’. They understand that particularly in Cape Town, the buy-to-let market is huge and that there are big returns to be made.
Regardless of the climate, the luxury property market in South Africa continues to thrive, offering opportunities for both foreign investors and local millionaires to capitalise on this lucrative sector.
