Real Estate Investor Magazine South Africa Real Estate Investor Magazine - September 2017 | Page 35

MARKET INTELLIGENCE
13.5%. The latter region has seen a noticeable price growth
from a with
high of low
18.4%
year-on-year
the create
3rd quarter
have slowing
combined
interest
rates in to
a
of 2016.” unexciting, reasonably predictable, but
relatively
That all sounds amazing and will gladden the hearts of all
somewhat
market,
some
hot- reading
and
property slow
owners
in Cape with
Town;
if of inevitable
course they stop
cold there,
spots.
and don’t look at the bigger picture.
first investors,
caution comes
out remain
of the same
Cape Town
Met-
For The
many
yields
reasonably
good
ro compared
report, which to notes
that “this
year-on-year
growth
rate
when
interest
rates
on bank price
deposits
but
represents the 5th consecutive quarter of slowing from a 10-year
those
requiring
borrowing,
who in are
higher-rate,
high
of 15.7% revised
rate recorded
the also
1st quarter
of 2016”.
UK taxpayers
will red
start
hit Town’s
in April
when the
But the biggest
flag to
for be
Cape
semigration-driven
market on
is when
one looks
at the numbers
the Gauteng
tax relief
mortgage
interest
will be in restricted
to market
the
the For
same this
period,
which are
nothing
short of are
depressing.
basic over
rate.
reason,
some
investors
looking
According to FNB’s property barometer for the province
to hold
properties in a limited company.
“All three of Gauteng’s major metros continue to show low sin-
I gle-digit
reflected house
in September
“it is of
price growth. 2016
In the that
2nd quarter
of course
2017, the
City early
of Tshwane’s
average
house price
rate was
far too
to tell estimated
what the
medium
and growth
long-term
4.48% of
year-on-year,
by a small
margin
than but
Ekurhule-
impacts
Brexit will
be on
the stronger
market
the
ni’s 3.71% and City of Joburg’s 3.31%.
initial
worries
appear
to
have
been
proved
totally
“With Gauteng Consumer Price Index (CPI) Inflation at
unfounded”.
What’s
is of that
lot low
of the
5.2% year-on-year
for interesting
the 2nd quarter
2017, a these
nom-
current
commentary
on rates
the translate
property
contains
inal house
price growth
into market
house price
declines
in real terms
(when
adjusted
for CPI), Tshwane to the tune of
no mention
of the
word
“Brexit”.
-1.8% year-on-year, Ekurhuleni -1.4% and Joburg -1.8%.”
What
is happening appears instead to be driven by
For Cape
Town sellers,
it’s supply
a simple
of
traditional
influences,
such as
and case
demand,
maths.
low doing
interest the
rates,
very low unemployment and the
If the city’s
market is being
driven
Gauteng buyers who are –
continuing
robustness
of the
UK by economy.
in real terms – in a negative market, how long can Cape Town’s
There
are
also
some
very
major national
stratospheric price increases last?
infrastructure
projects
on
the
cards,
which to will
also
The Cape’s market is in fact more vulnerable
the national
because impact.
it’s almost Crossrail
entirely due to
sustained net
have recession
significant
in the London
will in-
flow
property
from
other and
provinces
recent up
years
come
on of line
in purchasers
two years’
time
will in speed
that the region’s house price inflation has been so high.
movement
within
the economic
capital, outlook
which
will inevitably
Had the
national
improved,
there might
have not local
on parts
Greater
and
have effects
been a problem,
but of
if one
looks at London
all the statistics
rather
than just Additional
Cape Town’s current
performance,
it’s clear
that
central
London.
projects
include HS2
(the
are likely to realise if they sell, and how much they’ll be able to
afford in the Cape’s
current
market. to run between London
high-speed
railway
planned
the moment, you
twice north),
the house
upcountry
and At Birmingham
and get on roughly
into the
the
runway
than you do in Cape Town on an equivalent spend. Put simply,
at Cape
Heathrow
airport,
and
the
construction
of un-
the
property is fast becoming an investment domain that’s
major
nuclear
Hinkley
Point.
affordable
to all power
but the station
wealthy. at
Cape
Town prices
across the
board are currently at a level that’s too high for even moderately
prosperous
Gauteng investments
families to consider, and with a yawning
South
African
property price inflation gap of around 15% between the two
We
continue
to see
from
South
areas,
logic dictates
that significant
at some point interest
the lucrative
stream
of
African
particularly
to readily
s