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Coastal property prices rise

Jul 26 2013 19:05 Sapa

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Cape Town - House prices along KwaZulu-Natal's North Coast and around the Cape Peninsula grew "relatively strongly" the past year, according to Absa's latest quarterly housing review.

"House prices along the coast improved further in the second quarter of 2013, growing by a nominal 15.6% year-on-year, after being in a state of deflation from late 2011 up to mid-2012."

The bank's Third Quarter 2013 Housing Review -- released on Friday --finds the relatively strong performance of the coastal housing market was driven largely by two regions.

"The North Coast of KwaZulu-Natal posted nominal house price growth of 42.7% year-on-year in the second quarter [of this year]."

This was indicative of recent development along this section of the province's coastline and a consequent increasing demand for primary residential property.

"The Cape Peninsula and False Bay area in the Western Cape also recorded relatively strong nominal growth in the second quarter of the year, coming in at 16% year-on-year."

However, coastal regions in the Eastern Cape fared nowhere near as well, with house prices dropping.

"The Eastern Cape coastal region, despite having two metropolitan areas (Port Elizabeth and East London), recorded nominal price deflation of 3% year-on-year in the second quarter of 2013."

According to the review the drop in prices in this region was "related to base effects and came against the backdrop of relatively strong price growth recorded in especially East London a year ago".

Cheaper

On the average price of houses around the country, the review finds this has grown in real terms over the past year.

"The average nominal price of a new house was up by 9.8% year-on-year to about R1.7m in the second quarter of the year, which translated into real price growth of 3.8% year-on-year.

"The average price of an existing house increased by a nominal 11.9% year-on-year to R1.3m in the second quarter, which came to a real increase of 5.8% year-on-year in the quarter."

As a result, it was nearly 34% cheaper to have bought an existing house than to have a new one built in the second quarter of this year.

"The price difference between new and existing housing has remained relatively stable at just below 34% since the second quarter [of] last year."

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absa  |  cape town  |  property market
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