It is a well-known fact that the property market in Cape Town has always been firmly set at the top of the capital growth mountain.
A common perception is that while Cape Town receives the highest property sales prices, Johannesburg provides more ‘bang for your buck’ with lower property prices and a higher rental, especially for long term income seekers.
Cape Town has become a desirable location for many reasons, mainly infrastructure, politics, tourism and Semigration. Buyers find value and confidence in a property that is located in a well-run province. Renters are also lured by the lifestyle, despite increased rental prices with the Mother City remaining highly sought after throughout 2017.
Global financial crisis and property in South Africa
The state of the rand and property has never been more in the limelight than the last decade, or at least the last five years. With the newly elected ANC president, the rand saw a recovery with global financial markets reacting positively to the change.
Property market buoyancy is largely dependent on confidence in the economic climate, says Myles Wakefield, CEO of Wakefields Estate Agents. “Today, the rand reflects the confidence being felt locally and globally that the new ANC leader will begin repairing the damage”.
The fastest selling neighbourhoods in Cape Town
According to statistics released by the FNB Property Barometer (September 2017), the City Bowl is Cape Town’s fastest selling neighbourhood taking only 36 days from advertisement to offer (44 days in 2016).
In second place was Bloubergstrand taking 49 days and the Southern Suburbs taking 50 days on average.
The Johannesburg to Cape Town ‘Semigration’
The Mother City remained highly sought after, despite the economic and political climate. So much so that the property market took advantage of what is known as a South African ‘Semigration’ with many inland citizens moving to the coast in Cape Town.
Enticed by the lifestyle that Cape Town offers, many South Africans flocked to the Cape from all provinces, leading to an increase in demand, and in turn, rental and property prices. Areas such as the Atlantic Seaboard see astronomical prices and returns on investment due to lack of space caused by the mountains and the sea.
Average 1 bedroom unit rental in the CBD
According to internet database, Numbeo, the average rental of a 1 bedroom unit in the City Centre of Cape Town, Johannesburg and Durban are as follows:
Rental prices in Cape Town are thus 36% more expensive than Johannesburg CBD and 80% more than Durban CBD.
Adrian Goslett, CEO of RE/MAX South Africa predicts that Cape Town should see a continued house price growth in 2018. “While the very steep upward curve we are currently seeing may flatten marginally, Cape Town will remain a lucrative investment destination from both a capital growth and rental income perspective as the current growth is not a bubble.”
Property trends for 2018
There has been a noticeable increase in interest of new urbanism ‘mixed-use’ developments where residents can enjoy all the comforts of socialising, shopping, living and working that are within easy walking distances and eliminate a large period of time taken up by commuting and traffic.
South Africans are also looking for increased security complexes that provide both convenience and security for more peace of mind. Buyers are also looking to invest in property hotspots that have continued to grow despite the property price decline experienced as a result of the country’s economic and political woes. These property hotspots include the Western Cape, Midrand and the Natal North Coast.