Cape property still weathering the storm
Category Newsletter: Article
How long can the Cape property market weather the economic storm? That is a question that most commentators are asking in view of a countrywide slow-down in the property market.
There is no doubt that the Cape market, even a high profile area like the Atlantic Seaboard and City Bowl and other cape regions are beginning to feel the pinch of a poorly performing economy.
News from Gauteng and other provinces seem to be that the property markets there are now taking serious strain with an oversupply of property – much of it due to people wanting to move to the Cape – along with stubborn seller expectations that is putting a serious dampener on the markets there.
While not without its problems and stock levels here also beginning to rise, the Cape seems to be holding out well for the time being. The most recent FNB Property Barometer also confirms as much and its analysis of the various sub-regions in the country points to the Cape as still the strongest market.
According to the FNB Property Barometer, the Western Cape boasts an average price growth for this year of 5.7% compared to Gauteng with just 2.3% and KZN with just 2%. Importantly, FNB points out that within the Western Cape, the Cape metro is still achieving price growth well above this, especially on the Atlantic Seaboard and in the City Bowl, where it puts the rate for the first half of this year at 29.9% and 21.1% respectively.
A second key coastal area in the metro, the Western Seaboard (Blouberg-Milnerton-Melkbos) experienced year-on-year average estimated price growth of 14% as at mid-2017, an improvement from last year incidentally.
The Southern Peninsula and False Bay area too was still achieving inflation beating growth with an average rate estimated at 12.1% to 12.8% in the case of the Somerset West/Strand/Gordon’s Bay area.
That said, the important message from FNB and other market analysts, is that the market is slowing down and prices are coming under pressure. Buyers are very aware of this and sellers need to keep that in mind. With fewer buyers and offers, sellers may need to take a second look at an offer before summarily turning it down.
A latest communication from FNB also points to the sectional title sector of the market as performing slightly better than the full title sector for a number of reasons. One of these, is the relative affordability that sectional title offers compared to the often more costly full title option. Security and convenience are also key benefits of sectional title property.
FNB says that the top performer for the market as a whole, has been smaller units (less than two bedrooms) which has experienced a cumulative average price inflation of 479% since the start of 2001. Comparatively, two-bedroomed units have experienced growth over the same period of 366% and in the case of three-bedroomed units, 363%.
It is important to note that these are market averages and that each complex, street and suburb is unique. It is therefore always best to get insight from a local estate agent.
Author: Coastal Property Group
