Plett's Property Market Continues its Roller Coaster Ride
Category Property Sales in Plettenberg Bay
While Plettenberg Bay's buoyant property market has reached historic levels in 2021, the state of the local market has also raised questions of caution among industry players.
Last year saw a record, 942 properties registered at the Deeds Office, representing R2,7-billion in sales. But the euphoria surrounding these statistics have alluded to a "property bubble" of a new type, ironically caused by the buoyant market. While the record number of property sales is good news, there is a sting in the tail for the local industry relating to a sharp drop in available stock of houses and land for sale.
This stock under-supply has heightened competition among the area's estimated 30 agencies who need a flow of regular sales to keep their businesses ticking over.
Helen Ward, Principal of Helen Melon Properties, one of Plett's top Main Street estate agencies attributes the plethora of agents and agencies to Plett being a tourist-orientated community and economy. "Many people who were in the tourist-related industry were desperate to seek other employment opportunities during the lockdown and many of those entered the property industry," says Ward.
Ward believes there is going to be a "thinning out" of agents, because there is just not enough stock to support all businesses - and definitely not the number of agents. "While competition is good, the situation we have moved into will make it difficult for all estate agents in Plettenberg Bay to survive," says Ward. "The property business relies on sales to survive. If there is no stock, the number of opportunities in the market also shrinks."
Ward says another trend is for first time since 2004-07 there has been an increased uptake in vacant land in non-gated estates. Properties that have been sitting on the market for an extended period are suddenly being sold. "What is interesting is that in many instances they are not achieving much more than the purchase price paid in 2004-07. So the holding costs for those purchases have been expensive and indicates that vacant land, apart from, in the top gated security estates, has not been such a good investment."
Soaring building costs presently estimated at R15 000 - R20 000 a sqm depending on the finishes to build might have an effect on the developments on these properties. "It will be interesting to see how many of these properties that aren't developed will ultimately come back onto the market," says Ward.
An example of the low-stock phenomenon was highlighted recently. Two areas where there still is good stock are Barron's View and The Hill. In both these estates properties are being advertised "at an incredible rate by the majority of agents". "All agents are advertising the same properties over and over. It does give a false sense of how much stock is available," says Ward.
The high-sales phenomenon, to a great extent, was linked to people "semigrating" with an added attraction of working remotely and low interest rates. "Historically it has mainly been retired or newly retired people coming down to Plett to in live. But now we see more families arriving," says Ward.
"The recent surge in people from other areas buying in Plett had a lot to do with people not wanting to emigrate but found moving to the Western Cape coastal areas an attraction. The Plett market has been affected by people trying to get out of the cities and I think these are the people who are not planning on emigrating - they're the ones who have decided to stay in SA.
"All coastal towns are experiencing the same phenomenon - Hermanus has the same problem as Plett - and this goes for the whole Garden Route." Recent interactions with property specialists in the Eastern Cape showed that places like St Francis Bay have the same issues, like low stock and an influx of new home seekers, to contend with.
Twenty percent of property purchasers are from Gauteng. "The Jo'burg people moving to Plett are moving here because they want to stay in the country and they are looking for a life-style opportunity that is not in a city. This situation too has to a certain extent been created by Covid and the lockdowns. "The continued attraction of Plett as a destination depends on many factors and also depends on government regulations resulting from Covid policies all being lifted".
Author: Helen Ward