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After inflation, Atlantic Seaboard house prices are now in decline

Cape Town house price growth cools (practically) across the board …

House price growth on Cape Town’s Atlantic Seaboard has decelerated further, with prices up just 1.94% year-on-year in the second quarter. This is less than half the revised first quarter figure of 4.43%, according to FNB’s House Price Index, and a sharp drop from the multi-year high of 27.7% year-on-year in Q4 2016, just 18 months ago.

Include the impact of inflation, at an average of 4.5% in Q2, and prices in the area, which stretches from Green Point through Sea Point and Clifton to Hout Bay, are in decline. Use the consumer price inflation number for the Western Cape in particular, which runs at nearly one percentage point ahead of the national figure (5.4% in June, versus the overall Stats SA figure of 4.6%), and the picture looks even more worrying.

Nine out of 12 sub-regions tracked by John Loos in FNB’s City of Cape Town House Price Indices saw slowing price growth in the quarter. Of the four key regions – the Atlantic Seaboard, City Bowl, Southern Suburbs and Near Eastern Suburbs – only one saw house price growth accelerate in the quarter. What FNB terms “Near Eastern Suburbs”, which includes Woodstock, Salt River and Pinelands, saw prices up 17.57% year-on-year in the quarter.

Loos says these suburbs are the “most affordable … of those adjacent to the City Bowl”, and with traffic congestion in the metro getting progressively worse, its proximity to the city makes it attractive.

Woodstock, especially, has seen a large number of new residential property developments in recent years, and Loos says these “can contribute” to good price growth.

“And after major affordability deteriorations in City Bowl and Atlantic Seaboard homes, the Near Eastern Suburbs’ attractiveness for property investors may have increased significantly.”

However, he says that “while this region’s price growth has held up better than the other three sub-regions in close proximity, we believe that this is a mere lag, and that ultimately the more affordable sub-regions [will] begin to follow the slowing price growth trend with a lag, as is beginning to happen out in the more affordable norther regions”.

The trend of demand shifting outward to those northern regions, such as Durbanville, Bellville and Blouberg, has slowed too as home affordability has deteriorated “significantly” in these areas. This slowing started in the first quarter and continued into the second, with growth in one of the three (broader Durbanville) moving into single-digits.

“The Western Seaboard sub-region (including Blouberg, Milnerton and Melkbosstrand) saw a slowing in year-on-year price growth, from 14.3% in the third quarter of 2017 to 10.2% by the second quarter of 2018. This is the most noticeable slowing in price growth off the highest base of the three northern sub-regions.”

Overall house price growth for the entire City of Cape Town metro is at 8.69% year-on-year in the quarter, from 9.66% in Q1.

 

 

Q2 2018

Real house price growth (after CPI)

City Near Eastern Suburbs (including Woodstock, Salt River and Pinelands)

17.57%

12.97%

Elsies River, Delft, Blue Downs

17.44%

12.84%

Cape Flats

12.37%

7.77%

Somerset West, Strand, Gordon’s Bay

12.03%

7.43%

Bellville, Parow and surrounds

11.16%

6.56%

Blouberg, Milnerton, Melkbosstrand

10.21%

5.61%

Durbanville, Kraaifontein, Brackenfell

9.93%

5.33%

City Bowl

9.73%

5.13%

Cape Town Metro overall

8.69%

4.09%

Southern Suburbs

7.42%

2.82%

Southern Peninsula

7.19%

2.59%

Atlantis, Mamre

2.99%

-1.61%

Atlantic Seaboard

1.94%

-2.66%

FNB House Price Index (overall)

3,77%

-0.83%

 Source: FNB Property Barometer; CPI calculations are author’s own

Loos says that the “recent drought may have had some cooling impact on the Cape Town housing market, via its negative impact on the Western Cape economy, as well as on sentiment within and towards the region. However, despite the good recent rains, which will alleviate the region’s water shortage somewhat, we do not believe this house price growth slowdown will reverse in the near term.

“This is because we remain of the view that the recent slowing price growth has been driven largely by some years of significant housing affordability deterioration, and that slower house price growth for a considerable period is due, until such time that affordability has meaningfully improved.

“Therefore, while severe drought conditions may be in the process of being alleviated in the Western Cape, which can be a positive for that region’s economy, we remain of the opinion that Cape Town’s house price growth will continue to slow in the near term, and move into a lengthy ‘benign’ period in line with the broader South African housing market, while incomes in the region gradually catch up with prices.”

* Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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Bwahahaha where are the grootbeks trying to talk up their beloved Cape Town property market now?

This hasn’t played out yet, not by a long shot…as alluded to by Loos, the DA-created water disaster hasn’t gone away, and I doubt it ever will, due to overpopulation.

Reason the Northern Suburbs growth has declined is the simple fact is that it takes 2 hours of traffic (or waking up at 3:30am every morning to avoid it) to get into work.

The political risks in WC/CT are huge…the DA has lost a huge swathe of support due to the de Lille debacle. Watch the effect of a change of political power will do to the property market then…

Just be glad you weren’t the semigrant pillock who “snapped up” the R6Million Knilworth townhouse last year…

“…semigrant pillock who “snapped up” the R6Million Knilworth townhouse last year…”

What did somebody like this ever do to you to warrant such vitriol. Probably just a family that moved to Cape Town because they saw a better future for their family.

Taking joy from somebody else’s potential misfortune. Terrible.

…”probably just a family that moved to Cape Town because they saw a better future for their family.”

Oh cry my a river, you hypocrite!

This is MONEYweb, not a bleeding hearts club. To take your reasoning to the extreme, any deal you make on the markets may be tainted by the loss of some little old lady’s lifesavings when you buy a bargain share after a price collapse (and no doubt gloat on your clever investing).

That big one to see a small one saying is applicable here.

You just sound like a pillock from polokwane utterly bitter with your poor return.
Nothing can go up in a straight line and a breather is inevitable.

The only straight line is the EEG plot attached to your cerebrum and it is horizontal I’m afraid…

Yep you are a bitter and twisted low brow loser from up north!

@rfjock. You’re right….this is a MONEYWEB site. So please post your bar brawl attitude elsewhere. Do something worthwhile & go to your backyard and tune your Ford Cortina!

@rfjock, perhaps you’d be more comfortable commenting on News24 as this is a site for thoughtful disagreement, not really a forum where “bwahahaha….” is the beginning of a comment.

Anyone with an ounce of sense knew that the CT market was due for a correction. Obviously.

You’re entire shtick is that you hate CT, think the property is overvalued, overpopulation prevails and DA is incompetent. We get it. Your comment history is simply a outlet for your personal gripe with CT to be made public.

What happened to you as a little boy? Why the inferiority complex? Or are you still a youngster bumping his head along in life, unable to express himself with facts and reasons (rather than personal and juvenile insults).

Bwahahahaha….well I never.

I guess you must be the one bitter ‘pillock’ that is jealous of all his mates that moved to the Cape. How has the JHB property market performed? Let me guess… you’re still battling to sell?!?

I said some time back, on Moneyweb, that prices would implode.
CT has become the most expensive city to live in thanks to the DA.
DA, is party that thought it a great idea to spend R300 MILLION on bicycle lanes in CT that NEVER GET USED.
Now we have to pay R56 p/m for a water meter and R150 p/m electricity service fee on top of the most expensive water and electricity prices in SA.
Youth unemployment has exploded in CT, well over 30%.
Well done DA.
All people talk about at dinners parties in CT is how expensive CT has become.
The DA, through all its INCREASED administered prices has taken BILLIONS OF RAND OUT OF THE LOCAL ECONOMY, that is why CT economy is suffering. Poverty way up, CRIME OUT OF CONTROL.

Wow. The ANC would have done much better then right?

Absolutely!!!! DA PEDDLES FEAR!!! Feel free to have yourself committed!!! maybe somebody will visit you!!

@woogoodly. Yes my apologies about the Valkenburg comment, uncalled for. But do you seriously believe that the ANC will do a better job given all the evidence to the contrary? Most of the muni’s it governs are insolvent, there are no service delivery. Look at the SOE’s run by ANC deployees? All insolvent. Look at the annual audit report of fruitless and wasteful expenditure, the amounts are staggering.

I am not saying you should vote DA but you cannot seriously say that you are voting ANC because it has a better track record than the DA in running things effectively.

I live in a limpopo, sure rates and taxes are cheaper here, but around 10-20% of the time I don’t have water, not because of a lack of water, just because our local ANC municipality is defunct, so I installed a Jojo tank and a pressure pump, now recently my power started being a problem around 5% of the time, so now I have to look at generating my own power, I was in CPT recently, and it makes Limpopo look like some third world African country while CPT looks like Europe.

Would I pay more in rates and taxes for better service delivery? Hell yes.

PJJ did you visit areas like Lavender Hill, Manenberg, Silvertown, Bridgetown,Bonteheuwel, Delft, Ruyterwacht, Mitchells Plain etc when in CT???

Not Europe!!!

@PJJ then all you need is to take a 30% paycut, spend 2-4 hours in traffic every day, live with a bucket of water a day and develop a kak Cape Town attitude and you can feel right at home in Cape Town without all the expense of a matchbox-sized R6Million Townhouse (now reduced to R3Million after 17 weeks on the market with no takers…)

@woogoodly

If I had to list all the “bad” places to live in Limpopo I am pretty sure I would find out what the max character limit is per post on Moneyweb.

@woogoodly. You are not comparing like for like. Compare the areas you mentioned to any township area in Limpopo and you will still be far better off.

Look the DA is far from perfect and they are outdoing themselves shooting themselve in the foot De Lille, BEE etc etc. But how anybody of sane mind can vote for the ANC on the basis that it will provide better government is beyond me.

If you want to vote for the ANC beacuse you still have a historical connection to it or if you still have a chip on your shoulder when it comes to white people, I can at least understand it, although not agree with it.

But if your motivation is that you want to vote ANC because of its sterling record in local government in areas outside of the WC, I think you are delusional and your family should consider sectioning you to Valkenburg.

@rfjock

Look CPT has problems, but compared there where I live, at least if I lived in CPT when I opened my tap tonight to take a shower there would at least be a bucket worth of water ready at pressure.

…”I think you are delusional and your family should consider sectioning you to Valkenburg.”

The only delusional ones here are those that think DA hegemony after 2019 elections is guaranteed.

It is that exact condascending attitude that makes you a DA posterboy, and you are in for a shellacking in 2019… hugely.

Take your head out of your *ss and educate yourself on how the DA is imploding in WC by-elections.

I used the bicycle lanes to work but since the drought, I can no longer shower at work.

I still use the bicycle lanes on weekends. Best thing ever. Better than being ridden off your bike in Joburg or Durban.

Unemployment exploded in CT because of mass urbanisation. People moving from remote areas and the Eastern Cape to Cape Town in search of work. Didn’t get it. Unemployed.

Not that hard to figure this stuff out.

I have a place in the Northern Suburbs and Southern Suburbs. I’ve found that it’s worked out to be a good hedge. The one grows when the other stagnates. It seems the north-south market takes turns.

It’s worked out very peachy for me.

Property prices in decline but like all markets that will happen. Definitely overheated. Fact is that CT has an incredible ecosystem of schools and universities, beaches and mountains and is mostly safe and clean. So would I rather have R 100, 000 in brick and mortar in Kenilworth or Bruma? Easy answer

CT outprices itself. Let me be honest, if you can afford 6mil for a CT property you can actually emigrate to Portugal, Malta etc. CT is still in a third-world country does not warrant such extreme prices.

Suck it up CT!

With the current exhange rate R6M is still a little lite for Portugal, unless you are willing to buy a house older than 30 years and qualify for the cheaper 350000 Euro option (R5.7M) and that’s before any kind of fees etc, after all is said and done its probably going to be R6.5M but you are right, you will actually be living in a Western European country.

Plenty of nice houses in nice areas can be had in western Europe for under R6m, even in big rich countries like France and the UK, though not of course in the biggest cities.

There’s possibly ANOTHER FACTOR re slowing down of WC properties, despite the recent drought: the WC property market for the past decade or more benefited from uptake of “semi-grants”/retirees mostly from Gauteng & KZN.

The reason for such move was to move to a more secure region / less crime, better lifestyle, etc. Of late, serious crimes start to catch up to the WC as well. Not as bad as rest of country, but it’s a matter of time 🙁
Add to that, civil unrest in places that never experienced it ever, like Hermanus, Kleinmond, Hout Bay and (unprecedented) destruction of train coaches & other infrastructure.

Semi-grants must be thinking: why bother with the expense of relocating to WC, if it’s probably better…just to skip/leapfrog the Cape, and just emigrate proper? Beyond the borders of SA, and possibly beyond Africa?

My thoughts all along, why get the best seat on the Titanic when you can get into the rescue boat already? SAffers just hanging onto a myth

While you mention Portugal, a Portuguese acquaintance tells me the southern “Algarve” region is well-priced still & worth a look.
On the other side of the planet, in Phuket Thailand luxury properties listed on real estate sites still goes for a song (albeit not as cheap as years ago, thanks to our continually sinking ZAR).

C.T. is still SA’ flagship city in terms of showcasing sheer beauty, but yes, it’s geographically linked to SA’ political & socio problems. A matter of time…sadly…

As you say, we’re hanging onto a “it must go worse, before it can get better”-myth / or “it won’t happen to SA”. (…in WW2, all the positive-minded Jews that decided not to flee Germany, many ended up in Auschwitz)

SA is Zim in slow-motion (thankfully giving everyone sufficient “red flag” time in order to build up some offshore asset portfolio, or even taking yourself or family out.) One realises other countries have (different) issues to deal with…best to have a mindset change to consider relocating as a life ‘adventure’ 😉

bobsmithfromportugal and MichaelfromPhuket sounds good. Go for it!

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