During the past year, South Africa’s strongest property market has begun to yield to the relentless pressure of the economic decline, with the average house price growth in Cape Town slowing steadily since the first quarter of 2016 when a 10 year high of 15.7% was recorded.
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says that although year-on-year growth has dropped by almost two percent to 13.8% at the end of the second quarter this year, the market remains strong, especially in the two most expensive sub-regions in the city – the Atlantic Seaboard and the City Bowl.
“FNB’s City of Cape Town Sub-Region House Price Indices for the first quarter of 2017 has revealed that these have retained their pole positions despite mild price growth slowing.
“On the Atlantic Seaboard the average house price inflation rate barely moderated with a drop of only 0.2% from a multi-year high of 30.1% during the same period. The City Bowl market has fared almost as well, dropping only 1.6% from its 22.7% year-on-year high during the second quarter of 2016 to 21.1% recorded at the end of the second quarter this year.”
John Loos, household and property sector strategist at FNB Home Loans, says: “We would expect a near term slowing in price growth in the City Bowl and Atlantic seaboard, after major affordability deteriorations, and with some signs of foreign buyer interest in South Africa weakening mildly”.
“But housing markets can gain a momentum of their own, with investors and buyers becoming enthusiastic about an area merely due to the recent rampant price growth in that region.”
“Comparative annual statistics from Propstats show that in 2012 the median price for homes on the Atlantic seaboard was R2.4 million. This jumped to R3.662m in 2014 and R4.895m in 2016,” says Brendan Miller, principal for the Atlantic seaboard at Lew Geffen Sotheby’s International Realty.
“In City Bowl suburbs, the median price was R1.492m in 2012, increasing to R1.795m in 2014 and R2.4m in 2016″.
“Propstats records also show that the median length of time homes spent on the market in the City Bowl dropped from 68 days in 2012 to just 21 days in 2016. On the Atlantic Seaboard, homes spent around 97 days on the market in 2012 but only 42 days last year”.
“This year the median price for homes on the Atlantic seaboard has edged up to R5.1m, and homes are listed for around 30 days before being sold. In the City Bowl, the median price is now R2.85m and homes spend just 17 days on the market”.
Miller adds that this is a good indicator that property in the City Bowl and Atlantic suburbs are remain solid investments, and buyers are well aware of this.
“It’s important to bear in mind that both areas consist of several individual suburbs, offering a wide range of properties, from studio apartments and one and two and three-bedroom flats to luxury penthouses and freestanding houses in with broad price ranges”.
“Overall, however, the property market in the Atlantic seaboard suburbs – from Green Point to Bakoven, including Mouille Point, is still very strong and enthusiastic buyers are very much in evidence”.
“The City Bowl picture is similar, with a wide variety of properties options in suburbs from Woodstock, Salt River and Zonnebloem to Tamboerskloof, Oranjezicht and Higgovale as well as Gardens and Vredehoek”.
“This means home buyers can be sure that property in the Cape Town City Bowl and Atlantic seaboard suburbs will be good investments for years to come,” says Miller.