8% House Price Inflation Difference Between Cape Town (12%) & Johannesburg (4%)
Category Property Inflation Trends
The latest house prices in South Africa are showing a slowdown: as of July 2016, national house price inflation was at 5.2%, according to recent Lightstone research
Looking at the house price inflation growth in the four major provinces, it is evident the market has been slowing down over the most recent months. This is more pronounced in the Cape provinces with Gauteng joining the trend.
Whilst the City of Cape Town through 2014/15 has shown mildly stronger average house price inflation compared to the rest of the Western Cape Province – and was only marginally higher than the overall provincial rate of 7.7% during 2014/15, having slowed from a 2nd quarter 2014 11.8% high.
Despite the acute slowdown in the Western Cape it still comes out on top with a rate of 7.1%. However, the South African metro that bucks the trend and comes out tops by far is the City of Cape Town. House price inflation here has continued to rise and is currently sitting at 12%.
While house price inflation across the various metros is not expected to be exactly the same, the difference between the City of Cape Town and the other metros is significant. Property inflation in Nelson Mandela Metro and Ethekwini continues to grow at roughly 4%.
The Western Cape is the most expensive property market in South Africa due to the province having not only the second highest per capita income behind Gauteng, but simultaneously having a significantly greater land scarcity than Gauteng.
According to FNB's Property Economist, John Loos, the Western Cape's fastest pace of house price growth in recent times may have much to do with the province’s growing popularity as a destination for a significant group of the country’s more affluent “repeat home buyers”, and its status as the country’s second fastest long-term growth economy, says Loos. It also typically has a relatively low rate of departure, for either emigration of ‘semi-gration’ purposes – whilst a significant semi-gration has been taking place over the last few years from other provinces of South Africa to the Western Cape. In recent years it has been young families who, instead of cutting ties and building a life for their children in another country, opted moving down to the Western Cape. Schooling and tertiary education is amongst the best available in the country, the lifestyle is rated of an international standard and the area amongst the most beautiful in South Africa.
The other provinces in South Africa has been experiencing a gradual slowdown in year-on-year house price growth, which commenced in October 2014 and is largely driven by economic trends and developments regarding household finances (affordability due to high household debt levels) – a national trend which has not yet reached and influenced the Western Cape shores on the price inflation front to same level as in the rest of the country.
Source: Property Professional Magazine
Author: Property Professional Magazine