Cape Town’s most expensive housing regions are experiencing a slump in growth of their property pricing, while homes in more affordable areas like Woodstock and Pinelands are growing.
John Loos, a property strategist for FNB, said that Cape Town House Price Index has shown a continued slump in the growth rate of very expensive homes as Capetonians seek homes that are more affordable. This has resulted in the city’s more affordable housing regions becoming more resilient, with a few sub-regions showing recent price growth accelerations.
There are 12 defined sub-regions within the City of Cape Town’s metro area, with three of these sub-regions falling into the most expensive regions. These are the City Bowl, Atlantic Seaboard and the Southern Suburbs.
The sub-regions near the city and Table Mountain have experienced strong inflation in recent years, and Loos suspects that challenges in mounting home affordability challenges have contributed to a natural slump in price growth. It is surprising to learn that the severe drought currently ravaging Cape Town has not had an impact on residential prices.
Cape Town’s most expensive sub-region, the Atlantic Seaboard, has seen its average house price growth slow from 27.2% in the final quarter of 2016 to 10% by the third quarter of 2017.
Loos suspects that a widespread negative sentiment towards South Africa has had a negative impact on the region. Most of the property bought in the Atlantic Seaboard region was sold to foreign buyers. A 122.8% culminate growth in the past five years has been key in contributing to affordability challenges, and this has slowed down demand for both foreign and local buyers in the region.
The City Bowl’s price growth slowdown began before that of the Atlantic Seaboard. The Southern Suburb region saw its growth slow down to 12% by the fourth quarter of 2017.
According to Loos, the Northern Suburbs region is currently the most affordable region to purchase property in. This includes Woodstock, Salt River and Pinelands.