The huge problems currently being experienced in the Cape Town/Cape Peninsula property market are exacerbated to an alarming degree right now on the Cape West Coast, says Paul Henry, the MD of Rawson Developers and Construction.

The difficulties here, he said, arise from the fact that a significant percentage of the homeowners on the West Coast live elsewhere and buy here for holiday or retirement purposes — these are, therefore, their second homes.

In the difficult economic scenario now being experienced, said Henry, holiday home buying has almost come to a standstill and many of those who did buy here in boom times are now defaulting on their bond commitments.

"The situation appears to be especially serious from Yzerfontein northwards to Veldrift," said Henry. "Owners of second homes who used to be able to subsidise their monthly bond payments through short term rentals are finding that there are very few takers these days — the weekend away is often the first thing to be cut on an austere budget. For this same reason hotels and B&Bs are well down on turnover."

Houses, said Henry, are now flooding onto the 'for sale' market and some very attractive buys are now possible.

"The lucky sellers are those able to accept a substantially lower offer. The less fortunate sellers are those who still owe the banks far more than they can now recoup on a sale. In the worst cases, the owners have lost not only their holiday homes but also their primary residences because those were put up as security. The four major banks have collectively repossessed large amounts of West Coast properties since the start of this year."

Developers too, said Henry, have experienced hard times this year.

"Often they have completed the initial infrastructure such as boundary walls and guard gates, a show house and the services for one or more phases only to find that buyers are not materialising. We at Rawsons have plans to expand to this area on account of its long term potential, but we have now shelved those for a year or so."

Among the most severely affected developers, added Henry, have been those who planned to go ahead with retail centres or had completed them only to find now that they cannot hold onto tenants.

One project likely to buck the trend, added Henry, is Shelley Point. Here Dale Capital, the new owners of the hotel, country club, spa, golf pro shop and conference facilities have sufficient capital to continue developing through the recession in anticipation of the inevitable upswing in mid-2010. House prices, too, said Henry, have held up well here — at an average level very close to R2-million — the reason probably being that the upper middle and upper income buyers in this estate often have sufficient resources to ride out the recession.

In the circumstances, said Henry, South Africa’s banks ought to be as lenient and patient as possible. But, driven as always by the need to try and increase profits and drive up share prices, it seems unlikely that they will show much sympathy or understanding for the difficulties of this area which was beginning to emerge from poverty but which it seems will have to wait a while longer.

Absa provides 110% Absa announced on Monday that mortgages of 110 percent are now available...

Find your dream home In the market for a new home? Browse our massive database for the perfect property...

Property slump is over! House prices increased by 6.9 percent year-on-year in August...