Cape Town’s property market remains resilient, showing pockets of positive activity in a national environment characterised generally by weakened economic growth, says Richard Day, Pam Golding Properties National General Manager and Cape Regional MD. According to Lightstone data, Cape Town’s year-on-year house price growth was 13.4% in early 2017, as house price inflation continues to accelerate.
There is of course some concern about the impact of the recent ratings downgrades on the property market. The Monetary Policy Committee of the South African Reserve Bank have indicated that South Africa is at the top of the interest rate hiking cycle for now. However, while the current economic situation warrants lower interest rates – and would be much welcomed as a means of helping stimulate growth – political uncertainty is creating economic instability and impacting on investor confidence, and may ultimately renew upward pressure on interest rates should the current low inflation rate environment reverse.
But despite these challenges, Pam Golding Properties’ results for the first quarter indicates positive sales activity in several Cape Metro suburbs including the Atlantic Seaboard, Blouberg, Camps Bay, City Bowl, Hout Bay, Newlands and the South-Eastern Suburbs. According to the FNB Property Barometer’s House Price Index (May 2017), the Atlantic Seaboard showed the strongest house price growth in the first quarter, with an estimated year-on-year house price growth of 33.9%. “This market has become increasingly price sensitive with buyers taking longer to commit”, says Basil Moraitis, Pam Golding Properties area manager for the Atlantic Seaboard. “Now more than ever, skilled and experienced agents are required to broker sales so that buyers’ and sellers’ expectations can be matched.” Top sales during the first quarter of 2017 include R30 million for Glen Beach, Camps Bay and a plot of vacant land in Bantry Bay that sold for R25 million.
The City Bowl followed closely with a 20.9% house price growth in the first quarter of the year, which is unsurprising given the development boom and strong demand for city living. The Southern Suburbs also reported a good run on sales for the first quarter, especially in Bishopscourt, Upper Constantia and Rondebosch with a record sale in this area of R15.5 million for a Sandown Road property.
“Semigration remains a key catalyst in house price inflation in the Western Cape and Pam Golding Properties continues to see people opting to first move to Cape Town or to secure estates around the country before considering other alternatives including emigration, says Day. This is reflected by the large percentage of sales linked to the desire to downsize (29% of sales according to FNB figures), says Pam Golding Properties research analyst, Sandra Gordon. Many Gauteng buyers are drawn especially to the Overberg and Boland areas, looking for a country lifestyle that is still relatively close to Cape Town. Agents say many of the Gauteng sales are to buyers wanting a second residence, with the intention to settle in the Cape in the long term.