Robust growth in property prices
DESPITE South Africa’s economic slowdown, Cape Town’s property market remained robust, with price growth of 11.8% in the first quarter of this year, fuelled by semigration from other regions.
Richard Day, the national general manager and Cape regional managing director of Pam Golding Properties (PGP), said the PGP Index showed that national house price inflation was 4.5% in the first half of this year, but price growth in Cape Town was 11.8%.
“Cape Town’s resilience, despite the country’s economic slowdown, is encouraging, but the long-term sustainability of the property market depends on positive activity across all segments. We are seeing in the Western Cape that much of the positive market activity is fuelled by the lower-price band, where inflation in house prices of less than R1 million was 15% during the first half of the year,” he said.
Kevin Jacobs, the broker/ owner of RE/MAX Premier, said recently that the demand for property in the city was a result of people from the northern parts of the country moving to the Western Cape.
“While a truly African city, Cape Town has a global outlook that has attracted strong investment from local and foreign buyers. The Southern Suburbs have gained particular attention from buyers living in inland cities such as Johannesburg who are looking for a more relaxed lifestyle, a better work-and-play balance, and a seemingly better level of safety and governance.”
Jacobs said although existing homeowners and those who had the finance to enter the market have benefited from the rapid growth in prices, first-time buyers were struggling to get their foot in the door.
“In a city such as Johannesburg, first-time buyers account for about 27% of the market, while in Cape Town it is much less. If you go by FNB data, in 2016, 8% of housing transactions in Cape Town were concluded by first-time buyers, reflecting the strain the price of property has put on up-and-coming buyers.
“While the need for more affordable housing options for first-time buyers will have to be addressed, those with access to finance to get into Cape Town market will continue to reap the benefits for the time being.”