Despite an overall modest slowdown in house price growth in South Africa’s residential property market, with house price inflation averaging at 4.88 percent in 2016, which is only marginally below the 2015 national average of 5.34 percent, the three coastal metropolitan markets of Cape Town, Nelson Mandela Bay and Durban continue to outperform the interior metro markets.
So says Dr Andrew Golding, CE of the Pam Golding Property group, who points out that while Cape Town remains by far the strongest metro housing market, Port Elizabeth and Durban have shown increasing growth in 2016. According to the latest data available from Lightstone, house price inflation in the Cape metro averaged 11.5 percent last year (2016), while Port Elizabeth and Durban’s house price inflation remains above the national average at 7.2 percent and 6.8 percent respectively.
Says Dr Golding: “We believe that market growth will become increasingly concentrated in hot spots which continue to experience high demand for a variety of factors, including convenient access to the metros or economic hubs, value for money, and as desirable and secure lifestyle locations”.
“Apart from the ongoing activity along the Cape coast, the Garden Route areas from Mossel Bay through to Knysna and Plettenberg Bay are experiencing heightened demand for homes, mainly among domestic buyers making a lifestyle choice to relocate.”
Sandra Gordon, Pam Golding Properties senior research analyst, says the Eastern Cape region is an area to watch, attracting buyers who want a coastal lifestyle combined with good governance and value for money homes. “With considerable investment in Coega and new nodes springing up, we may see this region developing and playing catch-up with the Western Cape and KZN North Coast areas.”
Adds Dr Golding: “Port Elizabeth is increasingly coming into its own on the back of ongoing investment in the city’s western areas and development around Coega IDZ, with residential property prices set for significant growth, particularly as people look to move from other provinces and cities to nodes or areas they perceive as well managed, safe havens.”
In KwaZulu-Natal the strongest activity remains along the highly sought after North Coast strip from Durban through to Ballito which is popular among investors and end-users alike. Upmarket areas such as uMhlanga and Sibaya will continue to be high growth areas.
Carol Reynolds, Pam Golding Properties area principal for Durban Coastal, says the quantum of developments in these areas is enormous, and this is a strong indicator of confidence in these suburbs. “We foresee house prices increasing year-on-year in both uMhlanga and Sibaya and while some have cautioned against over-supply, the range of products is diverse, appealing to a spectrum of buyers from investors to retirees, executives and families”.
“Durban’s North and South Beach areas, including The Point have increased in popularity, firstly as a result of the general upgrade to the Promenade and again due to their huge value for money, particularly when compared to other prime beachfront locations nationally and globally. Investors are starting to snap up the well-positioned units and renovating them with the expectation that the area is going to become highly sought after in the next few years.”
Over and above this the Upper Highway areas of Kloof and Hillcrest are drawing home buyers, offering a sound value proposition with generously-proportioned homes in leafy tranquil suburbs providing an accessibly priced option for families wanting spacious properties in a more countrified ambience.
Concludes Gordon: “A factor which is evident is that property is increasingly being seen as a secure investment in uncertain times. Those who cannot afford to buy will exert pressure on the existing strong demand for homes to rent. A further positive is the focus among developers on mixed-use developments, including residential apartments as well as hotels with appeal for the foreign tourists. This new type of living provides opportunities for a new market with room to grow.”