NOW IS THE TIME TO BUY………………….
THE DROUGHT WILL NOT LAST FOREVER AND CAPE TOWN PROPERTY PRICES ARE SO AFFORDABLE HAVE A LOOK AT OUR OUTSTANDING RANGE OF HOMES AND INVEST BEFORE THE PRICES INCREASE!
Cape Town homeowners are facing a double whammy: the threat of taps running dry due to the water crisis and slowing house prices.
Rising house prices and the exclusion of first-time home buyers from the housing market because of affordability issues have been the hallmark of Cape Town’s five-year-long residential property boom.
Homeowners in the Western Cape have enjoyed a 50.4% increase in the value of their properties over the last five years to December 2017, compared with 31.9% for KwaZulu-Natal and 21.9% for Gauteng over the same period, according to latest figures from FNB.
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 has been the reason behind rising house prices.
House prices have also benefited from the continued “semigration” trend of property buyers from Johannesburg, Tshwane and KwaZulu-Natal relocating to the Western Cape – particularly Cape Town, in search for a more relaxed lifestyle.
However, the water crisis and fast-approaching Day Zero in Cape Town is starting to impact house prices and desire of up-country buyers to relocate.
Although Cape Town house prices are still beating inflation, they slowed to 9.7% in the fourth quarter of 2017 from highs of 15% in the first quarter of 2016, according to figures from Standard Bank Group. “Although it would be difficult to separate and quantify the reasons for this easing growth, the Cape Town water crisis will have exacerbated it,” economist at Standard Bank Siphamandla Mkhwanazi said in a note.
“Also, the drought and government’s slow response will affect consumer sentiment negatively; demand for property is therefore expected to suffer and, ultimately, further dampen house price inflation,” he said.
Figures from FNB property strategist John Loos also point to a similar trend in which prices in the Western Cape as a whole have already dropped. In the fourth quarter of 2017, Western Cape house prices slowed to 4.4% compared with 4.8% in the previous quarter. Gauteng, KwaZulu-Natal and the Eastern Cape recorded growth, except the Western Cape (see below).
Rising Western Cape house prices have made affordability difficult for middle-income and first-time home buyers and declining prices will help in that regard. “Slowing house prices is a good thing as people might finally be able to afford to get into the housing market,” said Loos.
As the water crisis continues, the allure of moving to SA’s tourism jewel and the “semigration” trend is starting to diminish. Research from FNB points to a decline in the net inflow of repeat home buyers into the Western Cape.
Loos said the decline in buyers migrating to the Western Cape might be driven by the water crisis and home buyers that are ditching the region in search of value-for-money (and water) elsewhere.
The current trend seems to be that the water crisis was less likely to have an impact on the mid-market with properties valued between R1 million up to R4 million.The upper-end property market – where sales upwards of R150 million in Sea Point, Fresnaye, Clifton, Bantry Bay, and Camps Bay have become the norm – has been hit the hardest due to water shortages.
The DA, which controls the Cape Town, hasn’t covered itself in glory. At a time when the political party should be addressing the problem facing the city, it has been preoccupied with internal squabbles and the dismissal of mayor Patricia de Lille.
The big question is whether the decline in property prices, demand and migration of up-country buyers will be a sustained trend, and that depends on how the water crisis is handled.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).