It’s no secret that the property market in the Western Cape has become the strongest and most stable regional housing sector in the country, consistently registering double-digit quarterly increases despite the economic downturn, while other provinces have wallowed in the single-digit price growth territory.
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And with the other provinces experiencing far more subdued average growth rates of between 2% and 5%, it’s the Western Cape’s market buoyancy that has bolstered the national average.
And, indications are that the impact of region’s market power is no longer confined to the Western Cape - it’s also become the main driving force behind the national house price inflation rate, which is starting to show signs of recovery, according to the report
FNB Property Economist, John Loos says the Western Cape’s repeat buying has accelerated steadily since 2009, now dwarfing the net migration rates of the other eight provinces and it continues to be the preferred ‘semigration’ destination
The report revealed a 7.4% year-on-year national growth for the month of June, which was slightly higher than the 7.2% rate recorded for May, “extending the recent mild accelerating trend in average house price inflation to five months”.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says the exponential growth in the Western Cape’s market was first felt in Cape Town about eight years ago when the socio-economic climate in South Africa began to destabilise.
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“Sentiment towards the Western Cape became progressively more positive as the province continued to show sound economic management, and we are now seeing significant interest from repeat buyers from other provinces.”
Chris Cilliers, CEO and Principal for Lew Geffen Sotheby’s International Realty in the Winelands, says this scenic region has become increasingly popular with professionals looking to de-urbanise and buyers from Gauteng seeking a more secure lifestyle, as well as retirees wanting to move away from the hustle and bustle of the city.
“Up to 40% of our current investors in the Winelands and Somerset West are from Gauteng and other parts of South Africa.”
Cilliers says they are also seeing more upcountry buyers investing in retirement properties that they rent out until they are ready to move to the Cape.
“This gives people the opportunity to plan for their old age with the confidence that their capital investment will not only hold its value, but will also offer excellent growth,” he says.
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“We have noticed a significant shift in the buyer demographic in recent years, with the False Bay coastline fast becoming the new ‘hotspot’ for upcountry buyers looking to invest in second homes in the Cape.”
Thomas says this shift is not only driving up property values, but also closing the gap between asking prices and achieved selling prices.
Geffen says that although the market surge in the Western Cape was initially confined to Cape Town and surrounds, this is no longer the case.
“The growing influx of upcountry investors moving to the Cape has seen property prices in Cape Town soar and, as a result, buyers started to look further afield to other coastal towns where they can enjoy a similar lifestyle at more accessible prices,” he says.
“Semigration currently accounts for 35% to 40% of all sales in the Garden Route. and for the first time our offices in towns like Knysna are now selling more primary residences than holiday homes to buyers originating in Gauteng.”
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The study also found that the Western Cape has the lowest percentage of repeat buyers leaving the province, as well as by far the strongest net inward migration of repeat buyers from other provinces, which is attributed to its solid economic growth rate and perceptions of a high quality of life.
While there is no doubt that the migration from other provinces is contributing significantly to the strength of the Western Cape housing market, in Cape Town, another major influence is the region’s topography that restricts the city’s ability to expand.
“Because of the natural limitations imposed by the coastline, mountains and the percentage of land under conservation, available greenfield land is becoming increasingly scarce, and the spiraling demand will soon result in a shortage of investment opportunities and sharp increases in price,” says Geffen.
