One of the most important outcomes of this year’s local government elections (LGE) and the shift in power to the opposition, the Democratic Alliance (DA) in particular, has been that service delivery matters. And that’s had an impact on property prices

Service delivery matters to the country, local communities, the economy and property market, says Samuel Seeff, chairman of the Seeff Properties. These have been the most hotly anticipated election results since 1994 – and, according to Seeff, the shift to the opposition in key metropolitan areas such as Nelson Mandela Bay, Tshwane and in Johannesburg is a clear signal to government that service delivery is critical. What is more, the better you deliver, the better you do at the polls, as the Cape metro results showed.

The news from the international markets and economic analysts have been positive, and we have seen the rand strengthen against the major currencies to some of the best levels since 2008. As one analyst, Maarten Ackerman of Citadel Advisory, says: “This business-friendly election result has been welcomed by the investment community with the rand reaching R13.67/$ on Friday. It traded at R13.71 on Monday morning.”

A strong rand will have a positive influence on the economy, interest rate and ultimately, the property market, says Seeff. As the Cape case study has shown over the last five years, people want to live and invest in areas where services are top notch. This is precisely why property buyers have streamed to the Western Cape and the Cape metro in particular in significant numbers.

At the same time, the Cape has increased in wealth as skills and resources have migrated here and with that, business and property growth. The result has been a buoyant property market with strong demand and an almost sell-out of property stock in many areas. Even now, as the market has been driven downwards by the poor economic outlook, the Cape is still reporting better activity compared to many other areas including Johannesburg and Pretoria.

FNB’s household and property sector strategist John Loos confirmed in his recent Q2 FNB Property Barometer that while the national average house price inflation rate was 7.1% for this year, it was far higher at 12.1% (climbing for the fifth consecutive quarter) for the Western Cape.

What we have also seen, says Seeff, is that top-end prices in the Cape, especially in the suburbs of the Atlantic Seaboard, are now some 30%-40% higher than those of the wealthy Sandton and Johannesburg neighbourhoods.

Johannesburg’s wealthy will even pay more for Cape Town property as illustrated by the sale of a luxury Clifton villa early last year to a wealthy Johannesburg businessman for R111 million. This same property is now on the market for R150m, such is the confidence in the Cape property market, he adds.

Despite a slower market, this year has still seen some 25-plus sales on the Atlantic Seaboard ranging from R20m to just under R300m and contributing more than R1.1bn in total property sales. According to the data recorded on PropStats, this includes a number of sales to Gauteng and Johannesburg buyers ranging to R62m in Clifton and R75m in Fresnaye.