Proudly sponsored by

Is semigration to the Western Cape slowing?

There are already signs that the migration of Joburgers and Durbanites into the Western Cape, which has led to a rapid rise in house prices for many years, might be slowing down.
Latest research from FNB points to a decline in the net inflow of repeat home buyers into the Western Cape. Picture: Supplied

The frantic migration of up-country home buyers into the Western Cape over the last six years has been the hallmark of surging house prices in the region.

However, there are early indications that the migration of buyers (notably from Gauteng) into the Western Cape – known as the “semigration” trend – is starting to slow down.

Latest research from FNB points to a decline in the net inflow of repeat home buyers into the Western Cape. Net inflows refer to repeat home buyers migrating to the Western Cape excluding those migrating outwards to other provinces. Net inflows have declined mildly to 12.8% so far this year from 15.7% recorded in 2016 – the highest rate since 1999 (see graph below).

Source: FNB

Speaking at a housing market forecast event by credit bureau Tenant Profile Network on Thursday, FNB property strategist John Loos said it might be too early to draw conclusions about whether the decline is the new normal for the Western Cape.

The decline in buyers migrating to the Western Cape might be driven by a number of factors: severe drought conditions that have resulted in water shortages and home buyers that are ditching the region in search for value-for-money elsewhere.

Loos said there might be a drop in the Western Cape’s migration figures in 2018 due to unaffordable house prices and the region’s economy that is under more pressure from drought conditions.

Read: Here’s how Cape Town property prices have exploded

Other industry players have also noticed a decline in the pace of migration. “There has been a bit of slowdown in buyers from up-country purchasing properties. Buyers are waiting to see what is happening with the drought,” said Kevin Jacobs, a broker at RE/MAX Premier in Cape Town’s Claremont area.

Jacobs said family-orientated southern suburbs like Rondebosch, Claremont, Plumstead and Wynberg – with properties priced between R2.5 million and R3 million – are still seeing demand from “semigrants” as these areas tend to be relatively affordable compared with the Cape Town City Bowl. “Although there has been a small percentage reduction in up-country buyers, properties in the market are still taken up by locals.”

Ian Slot, MD of Seeff Atlantic Seaboard, said buyers might also be putting their migration and buying decisions into the Western Cape on hold pending the outcome of the ANC December elective conference, which would be a defining event for SA’s political and economic trajectory.

“I see the desire for buyers to move to the Western Cape remaining where it is – if not increasing. The actual move will depend on people’s financial means and ability to sell their property in Johannesburg or KwaZulu-Natal and fund their lifestyle in Cape Town,” said Slot.

Outperforming rest of SA

Over the last five years, Western Cape house prices have grown by 53.7% (on a cumulative basis) compared with KZN’s 30.2%, the Eastern Cape’s 26.6%, and Gauteng’s 24.7%, according to FNB.

House prices have benefited from the continued “semigration” trend of property buyers from Johannesburg, Tshwane and KZN relocating to the Western Cape – particularly in Cape Town. The perception that the Mother City is the best-run metro in terms of service delivery, offers a live/work/play offering and has good government-run schools is a drawcard for many.

Also, the limited supply of properties – largely due to land scarcity in the region as an ocean, mountain, farmland, and conservation areas limit housing developments – has fuelled stronger house prices.

Existing homeowners have benefited from a steep rise in the capital appreciation of their homes. However, rising house prices have made it difficult for middle-income and first-time homebuyers to afford humble abodes.

Underscoring this is that first-time homebuyers as a percentage of total buying reached 8.02% in Cape Town during the year to 2017, compared with Johannesburg’s 28.62% and Tshwane’s 24.3% (FNB figures) over the same period.

Read: CT house prices: Booming, a bubble or just strong?

This comes as little surprise given the wide house price and affordability gap between Cape Town and other cities across SA. For example, buyers will now shell out R1.4 million for an average house in Cape Town compared with R1 million in Johannesburg and Durban for a similar sized property, according to FNB.

More encouraging is that Western Cape house prices are starting to taper, said Loos. For the second time this year, house prices fell to 4.3% in the third quarter of 2017 – significantly lower than the highs of 11.1% recorded in the first quarter of 2016. “Slowing house prices is a good thing as people might finally be able to afford to get into the housing market.”

Oops! We could not locate your form.

AUTHOR PROFILE

COMMENTS   22

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Estate agents quoted here are in a blind panic.

Cape Town’s taps are going to run dry by March 2018.

The semigrant pillocks who bought the Great DA Lie about being the best-run province/city in SA are now sitting in 2-hour traffic into CT every day, whilst contemplating their future of having to collect their 25 litre-per-day from army-controlled water depots.

Great quality of life, eh Nige?

With Triple Junk status looming, and the WC economy imploding due to the collapse of the local agricultural/tourist industry, prospects are looking kind of bleak for prospective semigrants.

The final straw will be on Christmas day when they receive whatsapp images from friends in Gauteng of them splashing in their crystal blue overflowing swimming pools while the semigrants try enjoying their vasbyt braai next to their dried out, windswept holes in the ground….

Zille will be put out to pasture in 2019, to be replaced by someone with the surname of Madikizela….

So go ahead, “snap up” your R6 Million bargain miniature townhouse with dry taps…..Ian Slot is apparently awaiting your call….

But our Dear Leader Madam Mayor has assured us that Cape Town is a first world city and we will not run out of water! Bwahahaha!

As incompetent as the Jo’burg lot in this respect.

Realistically though, the quality of life for someone with an executive income in Cape Town is as good as anywhere in the world. Provided you stay out of the Cape Flats after dark …..

The real problem is that we are being looted by a corrupt ANC and should they be ousted soon, we could return to being a significant world rated country.

You have issues

Big issues……………….drought a buying opportunity……and yes we are the best run muni in SA. Of course it would be much better run without BBB-EE and AA etc.

Well said sir- it’s exactly what I’ve been saying for last 6 months- ever since discovering the disaster that the DA has allowed to occur during their watch. Taking Hout Bay as an example – the number of properties has DOUBLED since the troubles started. I will be in cpt for 2 weeks in Jan (was meant to be 4), & am very very worried over lack of water for most basic things – but esp sanitation. When we left in ‘86 there were 850,000 people in city of Cape Town – now there are FOUR MILLION. & guess when the last major dam built in WC – early 1980’s!!!!

It’s a real bummer when you missed out on the Cape Town property boom.

Eish. You have BIG issues. You must be BOBinOz’s cousin not so far removed.

rfjock (n) (rif-jok) defn: someone who cannot move to the Western Cape because his/her home mortgage balance is greater than the market value therepof. Esp. where psychologically impaired by massive jealousy / envy syndrome.

a gentleman wrote to the Weekend Argus about two weeks ago about all the development in Fresnaye – one minute you have a view, the next you are looking at the back of another block of flats!!!

in Newlands – 5 houses are to be demolished for 2 blocks of flats with 58 flats in total!!! concerns of the other residents mean nothing!!! no more sun, just living in the shade!!! the developers told the residents that the buyers will be using public transport!!LOL!!!

DA????????????

DA (DA = Disaster Area)

Ironic that the only disaster area is SA is the Western Cape (run by the DA)…

The DA has been densifying CT by working in cahoots with developers, who chase little old ladies out of their houses and build blocks of 8+0 flats where 4 houses used to be.

Of course getting 80 rates is a lot more lucrative for Madam Zille’s coffers…

Try complaining to the developer about this and all you get is a brush off to the effect that they are merely folloing the guidelines as set by the DA (they will refer you to the much-vaunted “Integrated Development Plan”)

Of course, the Integrated Development Plan contained NO provision for augmenting the water supply or improving the horrendendous resultant traffic congestion that Capetonians face daily.

The favourite topic at those cliquey Cape Town dinner parties is how to rid your JoJo water tank of those little red worms…

You seem like a very emotional person, so let me help you out with some facts.

– Over the last 3 years, Cape town has only received HALF the usual amount of rain. The fact that we still have running water is pretty amazing.

– Building flats in high density areas is called PROGRESS, something people in the rest of the country don’t understand.

So how your little red worms this morning, as you seem a tad grumpy for this time of the month?

If you call having to use the potty system for your daily ablutions “PROGRESS”, then you really are more obtusely gifted than everyone must think…

But at least you managed to string a few more words together than your earlier comment, so I guess that is “progress”…?

@rfjock – do your parents know that you’re playing on the internet? I’m not sure if they’d approve of you logging onto a discussion board meant for grown-ups. Anyway, while you’re here, please tell us more about these little red worms – they seem quite fascinating to you.

@rfjock: You seem to gain pleasure from other peoples’ misfortune. How desperate are you to use a drought to score political points.

@rfjock

This just sounds like every fast-growing city because Capetown is not such a backwater anymore.

The local government really needs to sort out traffic and water but densification in expensive areas is a ultimately a GOOD thing. If you think Capetown is bad, try Sydney, London or NYC.

@rjfrock what is pretty clear to me here is how far behind your thinking is.

In western cape we are learning ways to share land amicably with lower income groups (through controlled densification) AND at the same time managing to attract high income investors (through gentrification) at the same time, and with great success.

More worrying though is your disregard and lack of respect for earths water and lack of compassion for your countrymen in the cape. The whole planet is getting more and more dry buddy, Cape Town is suffering a drought but doing our best to deal with it. Show some compassion. What we wouldn’t do for some of those glorious summer afternoon highveld rains (I do miss them).

Traffic is an issue but is being addressed via very successful and first world public transport.

It’s obvious that your way of thinking is just so so far behind the way we progressive South Africans think (I am from up country before you get all emotional again).

Not that Cape Town is perfect by any stretch but hey at least we are learning to respect the earth and make space for each other.

Be a part of the solution and not the problem buddy.

>>> In western cape we are learning ways to share land amicably with lower income groups (through controlled densification) AND at the same time managing to attract high income investors (through gentrification) at the same time, and with great success. <<

So, that's a great marketing spiel, and I'm sure that pat on the back you are giving yourself feels great – but the reality is that the DA is an elitist organisation, with strong ties to big capital, and in the WC, big property developers – which really focuses on the interests of their wealthy backers at the expense of both the middle and lower classes.

So, yes, there is a lot of gentrification going on in the WC, and yes, skilled middle class worker will be able to find themselves a pigeonhole in the side of a high-rise – but for the lower end of the spectrum, the DA is almost as much of a disaster as the ANC.

Cape Town nice to visit , but normal people do’nt live in hollywood.
Once one has visited Cape Point , the winelands , the overpriced restaurants with bad service staffed by doped up opinionated trustnick 30 year students then one yearns for Joeys where things are real.
Oh, and if you make a friend they will not have been born in CT and likely be a pensioner from overseas.

Jealousy makes you nasty.

Heavy tourist areas all over the world tend to have worse service because they aren’t expecting repeat business and their location guarantees new custom. Its not a Cape Town thing but a success thing.

CTN is the only city in SA (perhaps Africa) that large numbers of international tourists would fly to visit. They must be doing something right!

And anyway – it’s a myth that Cape Town service is much worse than JHB. I have lived in JHB, and now live in CT but travel to JHB every week for business taking clients out to restaurants. I can assure you on average the service in JHB is just the same as CT – which is to say pretty good, and much better than I’ve experienced in other global cities like London, HK, Paris…to name a few.

@Sebastiano

I bet if you lived in those global cities, you would not be going to tourist districts and you’d find the service was excellent, as I find.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: