Atlantic Seaboard is still the darling

UNAFFORDABILITY is, in part, ever so slightly putting the brakes on house price growth in the Western Cape, and is certainly affecting the second-home market (holiday homes).

“After a very strong run, the city’s residential market is running into affordability challenges for many aspirant buyers, especially younger first-time buyers,” says FNB’s household and property sector strategist John Loos.

“This in turn may have started to mildly put the brakes on house price increases in many sub regions.”

However, the Atlantic Seaboard seems immune to this and is still seeing accelerating price growth.

“The really ‘hot’ region still appears to be the most expensive one, with estimated year-on-year house price growth of 33.9% on the Atlantic Seaboard, and this growth still accelerated in the first quarter of 2017,” says Loos.

“This region is something of a world on its own, typically driven by strong levels of foreign buying, and a significant number of very wealthy migrants moving from Gauteng and other South African regions to the Western Cape. The Atlantic Seaboard has a severe land shortage for new development, being situated on the side of the mountain area.”

While the FNB City of Cape Town Sub-Regional House Price Indices still showed widespread strength across most of the metro, nine out of 10 defined sub-regions were beginning to slow down in year-on-year growth in the first quarter of 2017.

The southern suburbs region has slowed to 12.6% year-on-year, from a multi-year high of 16.3% in mid-2015.

More recently, from a year-on-year growth high of 18.6% in the second quarter of 2016, the near eastern suburbs (including Salt River, Woodstock and Pinelands) slowed to 17.3% in the first quarter.

The City Bowl region’s price growth slowed from 23.1% to 20.9% over the same period. While these price growth rates are mildly slower than their multi-year peaks,they remain very strong, says Loos.