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Cape Town - The greater Cape Town area remains the top performing major metro housing market in South Africa, according to Dr Andrew Golding, chief executive of the Pam Golding Property Group.
This is due to a significant proportion of buyers relocating to the Western Cape choosing to settle in the greater Cape Town area.
House price inflation in the Cape metro averaged 11.9% during the first half of the year - according to the latest available data. This is nearly 5% ahead of the second strongest metro housing market of Durban.
"The outperformance of the Western Cape housing market relative to both Gauteng and KwaZulu-Natal began in mid-2013 - which more or less coincides with the start of the semigration of buyers to the Cape," said Golding.
"Factors fuelling movement to the Cape - the appeal of a proven record of service delivery, access to excellent schooling and the attractive lifestyle - are showing no signs of slowing down. There is still real growth in the property market."
He described Cape Town as a niche property market, because it is robust despite economic pressures. The demand for high-end properties remains strong and above average house price inflation is likely to prevail, in his view.
The severely constrained supply caused by the unique geography of this market has resulted in unprecedented demand, which in turn continues to push up sales prices.
The average selling price on the Atlantic Seaboard for a free standing house escalated to R14.4m for the calendar year to October 31 2016. In the Aurum luxury development in Bantry Bay, for example, sea-facing presidential apartments are selling at prices from R110 000 to R140 000 per square metre.
"Several new upmarket residential developments in the city centre will in some part deal with the demand from people wanting to live close to the bustle of the CBD and the amenities of the nearby V&A Waterfront, Cape Town Stadium and natural attractions such as Table Mountain and beaches," said Golding.
"With more than 7 000 people living in the city centre, the demand for inner city residential units remains high. The mixed-use 117 on Strand development is sold out, with a 40m² studio apartment in this block selling from R2.255m.
People are paying up to R55 000/m² for an apartment in a well-positioned, sophisticated development.
The Western Seaboard property market remains steady, with a strong demand for stock. Buyers who can’t afford property on the Atlantic Seaboard look to Blouberg and the West Coast for similar coastal living options. Sales are also robust in the South Peninsula, especially in the higher price band.
Sales trends in the Southern Suburbs remain firm as families move to the area to be close to schools and the university. Upper Constantia is performing well, especially with buyers coming from upcountry, and agents have recorded sales of R56m and upwards.
Golding said suburbs such as Woodstock and Walmer Estate are also benefitting from the effect as investors who can’t afford the Atlantic Seaboard or CBD. Hout Bay’s residential property market has also been buoyant in 2016.
In Cape Town’s Northern Suburbs demand for smaller gated community developments remains high.
"As a result of the shortage of stock in the Cape Metropole and therefore access to good schools, we have seen a higher demand for property from buyers previously looking in the Cape Metropole in the city’s Northern Suburbs such as Plattekloof, Welgemoed and Durbanville," said Golding.
Outside the Cape Town metro
Buyers relocating to the Western Cape are also settling in other urban areas such as Paarl, Somerset West and Stellenbosch and along the coastline.
"This was highlighted by the recent New World Wealth report, which identified both the Garden Route and the Winelands – notably Stellenbosch, Franschhoek and Paarl – as emerging wealth towns, each with an estimated dollar millionaire population of 2 500," said Golding.
"The most popular towns along the Garden Route for South Africa’s ultra-wealthy, according to New World Wealth, are George, Knysna, Plettenberg Bay and Wilderness, and we are seeing this in sales results."
There was a notable increase in sales in Paarl and the estates of Val de Vie, Pearl Valley (now part of Val de Vie) and Boschenmeer.
"There is extraordinary high demand for secure estate living in the heart of the Winelands," said Golding.
There is also an ongoing increased demand for agricultural property for lifestyle as well as for commercial use. Most sought after among lifestyle buyers are small scale (8-20ha) farms in the Elgin and Grabouw valley priced between R7m and R20m.
"In Hermanus seafront vacant land is like hen’s teeth, compelling buyers to purchase older seafront properties and either demolish or substantially renovate," said Golding. PGP recently sold two luxury homes for R26m and R19m respectively.
"Apart from also experiencing an ongoing trend as a result of semigration to the Western Cape, the Whale Coast towns of Hermanus, Onrus and Kleinmond are seeing an ongoing trend from buyers looking to acquire holiday homes with a view to retirement in the future," said Golding.
Richard Hardie of Knight Frank Residential South Africa said Cape Town enjoyed a particularly busy, buoyant market in 2016.
Higher priced homes had a healthy interest from buyers looking to relocate their families from Johannesburg to Cape Town. There has also been a strong demand for properties by parents of children who are studying in the city, which will thereafter continue to be an investment.
Another positive trend was Airbnb buyers, who buy and rent out properties, cashing in on the summer season with a heightened number of international visitors looking for an alternative to a hotel. These are then let in the winter months to local residents looking for a short-term rental.
“Comparing the preference of renting versus buying in 2016, people were definitely inclined to purchase property and keen to catch the rising market. The beginning of 2016 also saw a weak rand bring the international buyers in their droves,” Hardie said.
