With entry level property prices in Cape Town’s City Bowl having doubled since 2004, those who bought three years ago are likely to be sitting pretty.

So says National Referral Network (NRN) member Andrea Ward of CiTi Homes in the City Bowl.

“New home loan borrowers and investors are finding it more challenging to get into the market than those who bought here a few years ago,” she says. Expecting steady upward price growth and the spate of interest rate increases since June last year to drive rental demand strongly into 2008, Ward says the area’s entry level price of around R1-million is more than the average first-time buyer can pay at the moment.

And while property in the area, which has taken its place globally as a prime holiday and investment destination, is set to show strong long-term growth, monthly rental returns of between R4500 and R5000 are putting stock out of local investors’ reach. “New investors don’t mind subsidising their bonds but affordability can pose a problem for those whose cash flows are maxed out as a result of increasingly high mortgage repayments in recent months.

“Up to the middle of the last quarter of 2007, the market favoured neither buyers nor sellers. However, as a result of the most recent rate hike, we are expecting an increase in the number of properties for sale, especially from those not tenanted by the owners themselves.”

This might well create a buyers’ market which could curb what she calls the ‘greed-factor’ evidenced by some sellers who are asking up to 20 percent more than the market value of their properties. “Unrealistic asking prices were the norm 18 months ago. That’s changed now and the trend is increasingly for selling prices to be up to 10 percent less than the original asking price,” she notes.

The traditional buyer profile is changing.

Ward says further that the traditional buyer profile is changing. “This is particularly visible among upcountry buyers who were once ardent buyers of investment properties for children studying at institutions such as the University of Cape Town. Now, however, these same people are more in favour of renting, largely because they refuse to pay Cape Town’s high prices.”

For sellers prepared to price according to current market conditions, the City Bowl still offers a healthy turn-around time of three weeks. “The bottom line is that after three weeks on the market, a lack of buyer interest should encourage sellers to re-think their asking prices,” she says.

Market-related prices for two bedroom flats of up to 75m² range from a rare R800 000 to R1.5-million, depending on the availability of parking, views, condition and whether it is situated on a busy road or not. “For R1.5-million, a buyer can expect an immaculate apartment with two bedrooms, one or two bathrooms, a garage or secure parking bay, good views and in some cases, a communal swimming pool,” says Ward.

In Tamboerskloof, which forms part of the City Bowl, she is experiencing strong demand for cottages. These are essentially 150m² homes on stands of between 200m² and 350m², either semi-detached or freestanding, and often without parking. Saying that price is a major driving factor, she notes that these homes are selling like hotcakes to buyers who are paying anywhere from R2-million to R2.5-million. “Few and far between, they are particularly in high demand from young couples who require more space and are therefore moving from their City Bowl apartments but don’t want to leave the area,” she says.

According to Ward, an average four bedroom house in popular Tamboerskloof costs up to R4.5-million while in elite Higgovale, which sits on the slopes of Table Mountain, a vacant 1200m² recently sold for R5.5-million.