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Buyer perception in the Western Cape property market is gainsaying official figures that indicate South Africa is technically in a recession.

Martin Schultheiss, CEO of Harcourts Africa, says the group’s estate agents in the Western Cape are reporting renewed activity in their local markets in the wake of the 450 basis point reduction in interest rates since the end of last year.

"We are definitely noticing increased activity from buyers in the market, with activity levels for May being the highest for 2009,” he notes. “Buyers seem to have judged that the market has reached its turning point and are quietly confident that it is on the way up. They are shrugging off the first-quarter negative growth figure of –6,4% in GDP that was recently released."

Schultheiss adds that the recent successful IPL cricket tournament has created an optimistic mood among consumers, which is being strengthened by the Lions rugby tour and the Confederations Cup soccer tournament excitement.

"The Cape Town council has also announced a project to the value of nearly R800m to upgrade water and sanitation systems as well as other major infrastructure projects that will create new job opportunities, all of which boost confidence," he says.

Confidence is especially evident at the top end of the market, where the effect of the reduction in interest rates has been to persuade tenants paying rentals of between R15 000 and R25 000pm to enter the market as buyers once again.

They are buying mostly in the R1,25m to R2m price bracket, where monthly repayments on 90% home loans range from around R11 600 to R18 600, says Schultheiss.

"And in some cases they are even using the remainder of their disposable income to buy second properties to let out – which is good news for the buy-to-let sector."