Tide turns as young buyers flood into Gordon’s Bay

Tucked into the north-eastern corner of False Bay, at the foot of the Helderberg Mountains, Gordon’s Bay has lazed under a reputation as a relaxed retirement and holiday-home town for many years.

Given the current economic situation and its detrimental effect on similar segments of the property market, it would be reasonable to expect sales in the town to be under some pressure. New trends, however, suggest that the opposite could, in fact, be true, according to Schalk van der Merwe, franchisee for the Rawson Properties Helderberg Group.

“Sales in Gordon’s Bay have traditionally leaned quite heavily towards the mature market,” he says. “This year has been very interesting in that younger people aged 22 to 37 have, for the first time, taken over as the dominant group of buyers. The level of demand from this new segment has been instrumental in maintaining positive growth in the area, despite the economic pressures affecting the wider market.”

Accounting for 34% of local registered sales it’s clear that the younger end of the market has spotted an attractive opportunity in Gordon’s Bay.

“You can’t discount the lifestyle benefits,” says Van der Merwe, “but I think the major driving force behind the younger market’s increasing interest in Gordon’s Bay is affordability. The average price of a freestanding home is R1.742 million, and sectional title sales average at R681 000. Compared to similar coastal spots in the Western Cape – particularly within commuting distance of Somerset West and Cape Town – those are serious bargains.”

For younger buyers, many of whom have yet to reach the peak of their careers, this offers a wealth of property options within a relatively achievable household income range.

“A family with a gross monthly income of R58 000 would be able to afford a freestanding home,” says Van der Merwe, “while a R22 700 a month income is all it would take to get a foot in the market with a sectional title property. Banks are also proving to be very accommodating in these kinds of price brackets, and are still offering clients 100% bonds, removing the limitations of having to save for a deposit.”

The increase in activity in the younger market appears to have already made an impact on the strength of Gordon’s Bay property. While similar coastal town prices are stagnating or even decreasing, Gordon’s Bay prices have achieved average year on year growth of a very healthy 10.4%.

“The best performing segment has been vacant stands,” says Van der Merwe, “which saw a spectacular 32% year on year growth. Freehold and sectional title sales growth were more modest, at 5%, but we’re expecting this to pick up now that we’re over the worst of the drought.”

It’s possible that the modest freehold and sectional title growth statistics are being skewed by an underperforming luxury market segment. Van der Merwe says properties priced at over R3m are not as attractive to younger buyers and have been achieving far lower growth than more affordable options. In fact, many are now selling for 20 to 30% less than their replacement value.

“There are areas like Harbour Island – which has an average sales price of R3.99m – that are managing to sustain double-digit growth in the freehold category,” he says. “In general, however, the luxury segment is under pressure, which presents some attractive opportunities for buyers in a position to invest now and reap the rewards later.

“Buyers have plenty of options at the moment, which means no matter what price bracket your property falls into, you have to position it strategically to be competitive,” he says.

With summer just around the corner, Van der Merwe urges prospective sellers to start planning as soon as possible to capitalise on the seasonal uptick in market activity.