SPOTLIGHT
Zooming in
BY MONIQUE DU TOIT on the Major Metros
Cape Town ’ s Market Conditions
Where to invest
BY MONIQUE DU TOIT
A
ccording to Lightstone property indices for April 2018 , Cape Town is continuing its unmatched growth in market activity , coming in at 9.3 %. Upon closer inspection , however , it becomes clear that not all Cape Town property is created equal .
The FNB Property Barometer for Cape Town , published in May , points out that Cape Town ’ s year-on-year price growth , while still the strongest in the country , has seen its 7th consecutive quarter of slowing . The Atlantic Seaboard , Cape Town ’ s most expensive suburb , saw a jarring slowdown , down from 27.5 % in Q4 2016 , to 2.3 % in Q1 2018 . John Loos , FNB Household and Property Sector Strategist , comments : “ This does not surprise us , as this sub-region has experienced the most rapid cumulative growth of all the sub-regions over the past 5 years , to the tune of 111 %.”
While the upper-end of the market is seeing a marked slowdown , more affordable suburbs are booming . “ Arguably reflective of the heightened search for relative affordability in or near to Cape Town ’ s prime place of employment , the City Bowl , is the indication that the most affordable sub-region within close proximity to the City Bowl , i . e . the Near Eastern Suburbs sub-region ( including amongst others Salt River , Woodstock and Pinelands ), shows the fastest house price growth of these “ Major 4 ” sub-regions in or near to the Cape Peninsula ,” says Loos .
Moving even further afield , all three major Northern Suburbs have seen double digit growth . The Western Seaboard region , including Blouberg , Milnerton and Melkbosstrand , saw a slowing in year-on-year growth , from 14.7 % in the previous quarter to 14.4 % in Q1 2018 . The Durbanville-Kraaifontein-Brackenfell subregion continued its mild acceleration , from 9.8 % in the last quarter to 10.1 % in Q1 2018 .
In the city ’ s affordable regions , the report notes that the Cape Flats house price index experience a further growth acceleration ( from 11.4 % in the last quarter to 11.6 %). The Elsies River-Blue Downs-Macassar region also saw acceleration , reaching 25 % up from 23.7 % in the last quarter . Loos attributes these growth patterns to a need for more affordable housing : “ We believe this continues to be the result of the relative in-affordability in higher end sub-regions after recent years of strong price growth , encouraging a search for relative affordability lower down the price ladder in the more affordable sub-regions .”
Those looking to invest in the inner city would do well to heed the signs of the times . Explains Carola Koblitz , editor of the CCID State of Cape Town Central Report : “ Just as it is evident that residential property in the CBD has stabilised , it is also evident to astute investors where future opportunities lie : in well-priced units affordable to the large number of professionals , across the broad economic base , who work in and desire to live in the Central City .”
SOURCES FNB , Lightstone , CCID
28 JUNE / JULY 2018 SA Real Estate Investor Magazine