House price growth slows
CAPE TOWN SUBURBS: HAS THE DROUGHT HAD AN IMPACT?
The average price growth for the Atlantic Seaboard decelerated noticeably from a revised 8% year-onyear.
Residential property price growth in Cape Town’s most expensive suburbs has slowed to 2.3% year-on-year in Q1 2018, from a multi-year high of 27.5% set 18 months ago.
FNB’s Property Barometer showed the average price growth for the Atlantic Seaboard decelerate noticeably from a revised 8% year-on-year in 2017’s Q4.
The bank’s household and property sector strategist, John Loos, says “this sub-region has experienced the most rapid cumulative growth of all the sub-regions over the past five years, to the tune of 111%”.
Over 15 years, average prices for the area stretching from Green Point, through Sea Point, Clifton and Camps Bay to Hout Bay are up 650%.
Strangely, separate data from Lightstone Property suggests that foreign interest in the province remains robust. January saw a rebound in the percentage of foreigners buying property, at a multiyear high of 4%.
The other two most expensive sub-regions in the metro, the City Bowl and Southern Suburbs, are also cooling. Price growth in the City Bowl is now at 10% (from 24% in 2016), while the Southern Suburbs slowed from 10.1% in Q4 2017 to 8.4% in Q1 2018.
“When viewing the major sub-region house price indices however, slowdown is not across the board,” Loos said.
“The clearest signs of slowing house price growth remain at the high end, after some years of strong affordability deterioration. But the search for greater affordability is arguably the reason why the slowing trend is less clear in more affordable regions further away from Table Mountain.
“Reflective of the heightened search for relative affordability in or near to Cape Town’s prime place of employment, the City Bowl is the indication that the most affordable sub-region close to it, the near eastern suburbs sub-region, shows the fastest house price growth of these ‘major four’ sub-regions in or near to the Cape Peninsula.”
These suburbs saw average house price growth of 13.4% in Q1.
Price growth in the northern suburbs remains more robust, posting double-digit gains in the first three months of the year.
“The slowing price growth was ‘overdue’ in any event, and more due to ‘natural’ market causes in response to prior years of significant home affordability deterioration. First-time buying levels are low in Cape Town relative to the rest of SA, a reflection of this poor affordability,” Loos said.
“Repeat home buyer ‘migration’ has slowed in 2017. This slowing may be in part due to poor home affordability in Cape Town as well as due to the drought making the region temporarily less appealing.”