John Loos, household and property sector strategist at FNB Home Finance, says Cape Town’s property market has shown signs of deterioration after outperforming the rest of South Africa for ten years.
Cape Town property prices have slowed down especially at the very high-income level, with the slowest price growth on the Atlantic Seaboard Seaboard, while the City Bowl is slowing steadily too,” Loos said.
“Comparatively ‘affordable’ suburbs on the Cape Flats have seen major property price growth, while more affordable suburban areas to the North also hold up better, indicating a search for relatively affordable properties.”
FNB’s latest property barometer, released in May, showed that Atlantic Seaboard property prices saw annual growth of 2.5% in the first quarter of 2018, compared to 27.5% in 2016.
Loos believes that the next set of Cape Town’s property price data will reflect that the city’s property price growth has deteriorated or even depreciated.
He blames a slowing in-migration from other parts of the country into the Western Cape – due in part to exorbitant property prices – for the market’s lacklustre performance. The drought, he believes, had a lesser impact on property prices aside from negatively impacting the Western Cape economy.
“A correction was expected to happen. The Atlantic Seaboard and City Bowl showed a combined growth of over 111% the past five years, which is simply exceptional,” he says.