Cape Coastal Homes Logo
You are here: Cape Coastal Homes / Latest News / Cape Town Northern Suburbs House Price Growth Exceeds Atlantic Seaboard

Cape Town Northern Suburb’s House Price Growth Exceeds Atlantic Seaboard

SHOWING ARTICLE 541 OF 1096
GALLERY

Cape Town Northern Suburb’s House Price Growth Exceeds Atlantic Seaboard

The rate of growth in residential property prices on the Atlantic Seaboard in Cape Town has dropped by nearly two-thirds over the past year to a fraction above 10% year-on-year. This is a significant cooling from the multi-year high of 27.2% in the fourth quarter of 2016. In five of the past eight quarters (2016 and 2017), average house price growth in the most expensive area of Cape Town, which stretches from Green Point to Hout Bay, has been above 20% year-on-year.

FNB household and property sector strategist John Loos writes, “It is possible that a slowing in the rate of foreigner buying of SA property last year, due we believe to a widespread negative sentiment towards South Africa at the time, could have had some negative impact on price growth in this sub-region, which is typically big on foreign owners and buyers. But again, we believe that 122.8% cumulative house price growth of the past five years has been key in leading to major affordability challenges, which ultimately must slow demand from both foreigners and locals alike.” 

Since 2013, average house prices have more than doubled in the three areas of Cape Town, including two of the most expensive three: Atlantic Seaboard (123%), City Bowl (113%), City Eastern Suburbs (105%).

The February FNB Property Barometer for City of Cape Town House Price Indices highlights this “noticeable” slowing across these regions of the metro “against Table Mountain”, which Loos argues is a direct result of home affordability challenges here are contributing to a “natural” price growth slow down. 

While house price growth in the Cape Town metro, as a whole, remains strong (up 10.8% year-on-year in Q4 2017) versus other metros in the country, as well as the national average, this was the sixth consecutive quarter of slowing.

The slowdown is not across the board, however. Three of the more affordable regions in the city – in the so-called ‘Northern Suburbs’ – are showing acceleration. Broadly, the trend still remains strongly upwards since the lows in 2009.

Even though there was a slowing in the strongest-performing of these regions in the fourth quarter, the Western Seaboard (Blouberg, Milnerton and Melkbosstrand), this was only a slight dip and growth remained robust at 13.9% year-on-year.

The broader Bellville area accelerated from 9.5% in Q4 of 2016 to 13.3% in the last quarter of last year, while the North Eastern Suburbs (Durbanville, Kraaifontein, Brackenfell) have gathered pace to 10% year-on-year in the fourth quarter.

Growth in the Cape Flats and Mitchells Plain/Eerste Rivier areas has been equally robust, with the latter actually jumping to 20.83% in Q4 2017, the highest level of growth across the metro’s sub-regions.

Loos doesn’t believe that the drought and possible further water shortages (a Day Zero scenario) have had a noticeable impact on house prices, yet.

“Going forward, however, should the drought conditions deteriorate further, at some point it is conceivable that they may become ‘recessionary’ for the Western Cape economy, should they reach a level where much industrial production needs to be scaled back and a lack of water hampers tourism and other economic sectors. A negative economic and employment impact should ultimately be a negative housing market impact. But we don’t believe that it has got to this level yet, and much will depend on this Winter’s rainfall.”

Author Hilton Tarrant / Moneyweb
Published 28 Feb 2018 / Views -
Disclaimer:  While every effort will be made to ensure that the information contained within the Cape Coastal Homes website is accurate and up to date, Cape Coastal Homes makes no warranty, representation or undertaking whether expressed or implied, nor do we assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information. Prospective purchasers and tenants should make their own enquiries to verify the information contained herein.