House prices in W Cape rise

Migration from other provinces, and supply and demand trend driving increases

THE WESTERN Cape is bucking the trend with the highest house price inflation brought on by a strong demand and migration of buyers from other areas, say experts. Lightstone, a provider of data, analytics and systems on property, automotive and business assets, said while the majority of metros have continued on an annual growth path of between 4and 6 percent, the City of Cape Town has seen growth at 12 percent.

The firm said an interesting trend was even though most of those migrating from Limpopo, North West and Mpumalanga chose to settle in Gauteng, most repeat owners who moved from a metro preferred settling in the Western Cape.

“Since the largest proportion of repeat owners live in metros, it was expected that the largest increase in repeat owners would be found in the Western Cape. What is striking about our findings is that the growth by repeat homeowners in Gauteng and KwaZulu-Natal has remained constant or decreased slightly, whereas the Western Cape has seen a very consistent upward trend. In this instance, the percentage of repeat homeowners living in the Western Cape increased by 1.1 percent in 2015.”

Lightstone said the cumulative effect of this migration could lead to an increase in house price inflation. This increase in homeowners would lead to an increase in the demand for property, which in turn would increase house price inflation.

Jacques du Toit, property analyst at Absa Home Loans said: “If there has been a trend of migration to the Western Cape compared to other provinces, it will lead to a higher demand for housing in the Western Cape, most probably in popular areas such as the Cape Town metropolitan area, the coastal regions in the province and small, quiet and tranquil inland towns.

“Under such conditions, property prices will reflect demand and supply trends, and price growth may prove to be higher than in other regions in the country, which may eventually push levels above those in other regions.”

John Loos, household and property sector strategist at FNB, said the Western Cape was the only province showing house price growth acceleration to 12.1 percent year-onyear in this year’s second quarter.

He said according to the report on provincial repeat buyer migration between provinces, a strong net inward migration of repeat buyers into the Western Cape far outstripped any of the other provinces.

“I think the ‘semi-gration’ drive to the Western Cape is driven by a healthy combination of ‘economic opportunity’, being the second largest economy in South Africa, a good lifestyle in Cape Town, and perception of well run local and provincial government services relative to other major regions in the country.

“The region has become very popular, and a strong economic growth region, and that is probably driving superior residential demand at the moment.”

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty said sentiment towards the Western Cape became progressively more positive as the province continued to show sound economic management and dependable municipal services.

He said the Western Cape’s market buoyancy was further driven by interest from repeat buyers in other provinces, as well as a number of upcountry buyers who were investing in retirement properties which they rented out until they were ready to move to the Cape.

Seeff chairman Samuel Seeff said in a climate with almost no economic growth and a slowing property market, the Cape continued its good performance, and not only outpaced other major metros, but also inflation.

“There is no denying Cape Town’s allure. It is transforming into a world-class city that attracts visitors from across the country and globe, many if whom end up buying here or leaving with the desire to either invest in property or event relocate here as soon as they are able to. The Cape property sector is an important contributor to the Cape economy including creating employment and related economic opportunity. This growth in turn will fuel economic growth, so it bodes well for the the future of Cape Town.”

Kevin Jacobs, RE/MAX Premier broker/owner said: “Local buyers still make up the majority.

“However, there has been a large increase in the number of buyers relocating from Joburg, Durban and Port Elizabeth. Properties priced correctly up to R3 million move quickly and are often sold within days of listing.”