Lies , damned lies , and statistics
Semigration driving Cape Town prices
BY LEW GEFFEN
I
n life , according to the late British Prime Minister Benjamin Disraeli , one will encounter three kinds of lies : “ lies , damned lies , and statistics ”. It ’ s the latter — by at least a country mile — that causes the most problems in the property market .
Both industry and consumers share equal blame for cherry-picking the numbers that suit their current narrative , and discarding by the bushel others that may offer a different and sometimes more unpleasant big picture . But while there ’ s a measure of comfort in taking the ostrich approach , selective employment of statistics is jeopardising the future stability of South Africa ’ s last remaining consistently lucrative investment region , which is the Western Cape and Cape Town in particular .
One of the most significant drivers of the region ’ s rampant but satisfying house price inflation rate for sellers in recent years has been the now firmly entrenched culture of “ semigration ”; a net inflow of repeat buyers into the province from other parts of the country , particularly Gauteng .
Cape Town ’ s peak was in early 2016 , when the Gauteng property market was still vibrant , despite an ailing national economy . In the intervening months , though , the picture has changed significantly across the country , although this wouldn ’ t be immediately apparent if one was to look at the Cape Town market statistics in isolation .
A Property Barometer compiled by FNB reviewing the Cape Town market over the second quarter of 2017 paints a fairly rosy picture – at least at the beginning . Using Deeds Office data , FNB compiled a set of house price indices for key sub-regions in the City of Cape Town Metro using a repeat sales methodology , which was then combined to get an overall picture of the city ’ s property market .
What they found was that in the 2nd quarter of 2017 , the City of Cape Town ’ s estimated average house price growth rate remained in double-digit territory to the tune of 13.8 % yearon-year .
It ’ s the only major market in the country to have shown growth in double digits , and the report further notes that the Atlantic Seaboard and City Bowl are “ red hot ”.
To quote FNB Property Economist John Loos : “ On the landscarce Cape Peninsula , the two most expensive sub-regions in the City of Cape Town Metro , i . e . the Atlantic Seaboard and the City Bowl , continued to be the hottest markets in the Metro despite some mild price growth slowing .
“ The Atlantic Seaboard average house price inflation rate moderated only very slightly , from a multi-year high of 30.1 % year-on-year in the 1st quarter of 2017 to 29.9 % in the 2nd quarter . The City Bowl has seen slightly more slowing , from its 22.7 % year-on-year high in the 2nd quarter of 2016 to 21.1 % in the 2nd quarter of this year , but it too remained red hot .
“ Slower , but still strong , are the Southern Suburbs with 14.7 % year-on-year growth , and the “ Near Eastern Suburbs ” ( including amongst others Salt River , Woodstock and Pinelands ) with
32 SEPTEMBER 2017 SA Real Estate Investor Magazine