Wesley Cowan
Galetti Auction Cape Town
Managing Director
In a market driven by high demand and low supply, the auction has emerged as a powerful tool to unlock true market value, particularly in cities like Cape Town, where stock levels are reportedly down by 30 – 40%.
Wesley Cowan, Managing Director of Galetti Auction Cape Town, believes this presents the ideal opportunity for South Africa to take a page from the playbook of leading global auction markets like Australia. “Australia is the benchmark,” he says. “The majority of properties in world-class cities like Sydney and Melbourne are sold via auction, and if there’s one thing that we can learn, it’s that scarcity drives demand.”
In Cape Town, property values are steadily climbing year-on-year, with many local and international buyers guided by the same fundamental buying principles as those driving the market in Australia. “Buyers are willing to compete for unique homes in Cape Town, and this is where auction comes in as the ideal method of sale in driving up prices – and demand – through competitive bidding.”
Cowan believes that Cape Town’s natural scarcity factor is similar to that seen in cities like Sydney. He adds that with Cape Town physically constrained by mountains and ocean, suburbs such as the Atlantic Seaboard, City Bowl and Southern Suburbs, in permanent short supply.
Addressing the auction lag that has long plagued South Africa, Cowan believes that it has taken years to address the common misconception of an auction being viewed as a ‘last resort’ for distressed properties. “Interestingly, TV shows like The Block have helped change the narrative, showcasing the benefits of auction as a transparent, fast and competitive method of sale.”
What We Can Learn from Australia
The early 2000s saw a sharp surge in auction demand in Australia, primarily driven by low property stock levels.
“Sydney’s housing market is officially the second-most expensive in the world (as per Time Out), yet it boasts the highest auction clearance rates (sold on or before auction) in Australia – at around 75 – 81% (Domain.com.au). This tells us that demand is high and that homebuyers are actively driving up prices.”
Melbourne has a clearance rate of 70 – 75% while accelerating markets like Adelaide and Canberra are coming in at around 66 – 78%. “In July, Adelaide recorded the biggest rise in property prices in the country – up by $71,500 year-on-year. And while the majority of properties are still sold via private treaty, many sellers are opting for auction as a means to generate higher returns.”
Benefits of Auction
For those interested in the auction, Cowan highlights key benefits as follows:
Auctions guarantee certainty for both sides of the transaction: “Auctions are a good way to prevent time wasters. Buyers are registered and pre-vetted prior to auction, so when the hammer falls, the sale is legally binding, eliminating the uncertainty of lengthy negotiations.”
A swift and efficient sales method: The marketing of the property should be handled by a team of seasoned professionals to ensure maximum exposure, with the sale concluded on the day.
More transparency: “In a competitive market where multiple offers are put on the table, a prospective buyer might not know where they stand. An auction is a great way to promote transparency, with all offers shared on an open platform. This also eliminates all the administrative issues and provides you with the opportunity to outbid those around you.”
More competition: “More competitive bids will help drive up your asking price, and it’s important to remember that there is no ceiling on what buyers can offer.”
Cowan believes that if done correctly – and by a trusted provider – an auction is the solution to every house sale in the current climate. “It’s important to remember that you aren’t after the first offer, but rather the highest offer, and this is an appealing prospect for any seller.”
To conclude, he says, “As Cape Town continues to face growing demand and limited housing stock, auctions present a timely and strategic alternative to traditional sales methods. With the global success of markets like Sydney offering a clear blueprint, South Africa has a valuable opportunity to redefine how property is bought and sold.”