Skills and pur­chas­ing power con­tinue their move south

Weekend Argus (Saturday Edition) - - PROPERTY -

LAST year was an­other bumper one for the Western Cape in terms of strong net in­flows of re­peat home­buy­ers from the rest of the coun­try, a trend that takes skills and pur­chas­ing power to that re­gion’s econ­omy, says John Loos, FNB’s house­hold and prop­erty sec­tor strate­gist.

“This trend has be­come noth­ing short of spec­tac­u­lar, mea­sur­ing 15.7% of the prov­ince’s re­peat buy­ing, hav­ing ac­cel­er­ated steadily since 2009, and now dwarf­ing the net mi­gra­tion rates of the other eight prov­inces,” he says.

This “semi- gra­tion” saw the Western Cape lift­ing its out­per­for­mance in terms of its abil­ity to at­tract re­peat home­buy­ers from other prov­inces, while re­tain­ing its own res­i­dents, to new heights.

“A com­pet­i­tive ad­van­tage, from a point of view of at­tract­ing skilled labour, is not only about a re­gion’s abil­ity to at­tract in­ward mi­gra­tion, but also about re­tain­ing cur­rent res­i­dents. Here, the Western Cape now shows su­pe­ri­or­ity too, with only 7.6% of its re­peat home­buy­ers leav­ing the prov­ince in 2016.”

By com­par­i­son, FNB es­ti­mates KwaZulu- Na­tal’s per­cent­age at 15.2% and Gaut­eng at 16.2%.

This ris­ing trend in the Western Cape since 2011 is partly due to the lagged re­sponse to the eco­nomic growth re­cov­ery that started in 2009 and con­tin­ued to 2011. But the trend con­tin­ued to last year de­spite five years of broad slow­ing in eco­nomic growth.

“This, we be­lieve, is a lit­tle more than a lagged re­sponse to ear­lier eco­nomic re­cov­ery. It also, in part, rep­re­sents a de­sire on the part of the af­flu­ent to re­lo­cate for qual­ity of life, some mov­ing for em­ploy­ment prospects, but many re­lo­cat­ing for re­tire­ment pur­poses.”

By com­par­i­son, the coun­try’s largest eco­nomic prov­ince, Gaut­eng, saw a marked de­te­ri­o­ra­tion in its net out­flow per­cent­age of re­peat home­buy­ers, and only Mpumalanga had a worse net out­flow per­cent­age.

“The trend should be of con­cern for Gaut­eng as it may bat­tle to main­tain its sta­tus as the fastest-grow­ing econ­omy over the longer term should the net out­flow of re­peat buy­ers (along with their skills and pur­chas­ing power) con­tinue to de­te­ri­o­rate. How­ever, we don’t be­lieve Gaut­eng’s sit­u­a­tion is as bad as it ap­pears be­cause we be­lieve high first-time buy­ing rates in that re­gion are in part re­flec­tive of a big eco­nomic op­por­tu­nity that con­tin­ues to at­tract young skilled labour mar­ket en­trants mov­ing to the re­gion to start their ca­reers. In ad­di­tion, Gaut­eng’s su­pe­rior home af­ford­abil­ity can boost such a young buyer in­ward mi­gra­tion.”

The Western Cape, on the other hand, needs to be con­cerned with find­ing a so­lu­tion to de­te­ri­o­rat­ing home af­ford­abil­ity.

This provin­cial econ­omy is a ser­vices dom­i­nated one heav­ily reliant on skills at­trac­tion and re­ten­tion. To sus­tain this net in­flow of re­peat home­buy­ers while re­tain­ing more fi­nan­cially con­strained first-time home­buy­ers, the re­gion has to find ways to use land more ef­fec­tively (which would in­clude den­si­fi­ca­tion with good ur­ban plan­ning) to cre­ate greater res­i­den­tial af­ford­abil­ity, while find­ing a so­lu­tion to rapidly mount­ing traf­fic con­ges­tion.

Loos be­lieves it’s pos­si­ble that de­te­ri­o­rat­ing home af­ford­abil­ity in the Western Cape could see the Eastern Cape and KZN in­crease in pop­u­lar­ity as coastal semi-gra­tion des­ti­na­tions.

PIC­TURE: SE­EFF

While Gaut­eng con­tin­ues to at­tract skilled first­time buy­ers, Western Cape reigns supreme with sem­i­grants.

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