Push and pull effect keeps Western Cape’s property market on course

Push and pull effect keeps Western Cape’s property market on course

The Yacht Club, one of the developments in the Waterfront marina showing solid activity despite the price slowdown in the Atlantic seaboard and City Bowl suburbs.

During the past five years, the Western Cape housing market flourished even as the national economy – and the balance of the housing market – lost momentum.

Leading the pack in house price growth were the suburbs surrounding the city centre, with the top performing sub-regions in the Cape Metro property market last year being the Atlantic seaboard at 18.3% and the City Bowl at 15.1%.

However, after several years of sustained acceleration, these markets ran well ahead of economic realities.

“Now with the national economy slipping back into a technical recession during the first half of 2018, property markets in some areas are contracting,” says Sandra Gordon, Pam Golding Properties research analyst.

“Nevertheless, while demand is weakest in the areas that enjoyed several years of sustained acceleration, demand remains buoyant in more accessible areas such as the City Near East suburbs of Woodstock, Observatory as well as Bellville and Parow in the northern suburbs.

“During the first half of 2018, the top three regions are the City Near East at a notable 17.0% price appreciation, with a healthy average house price growth of 11.4% in the northern suburbs and 11.2% in the western seaboard. In contrast, price growth on the Atlantic seaboard has slowed to 3.2% during the same period.”

Says Gordon: “After years of buoyant growth – particularly in the Atlantic seaboard, City Bowl and, more recently, southern suburbs – the issues of affordability and growing congestion are prompting buyers to look slightly further afield for suburbs which offer greater value for money or easier access to schools and homes. The true cost of a home, after all, includes the time and money spent on the daily commute.”

She says the result has seen a “rotation of sorts” in the Western Cape housing market, with potential homeowners reassessing the appeal of many suburbs. This has led to these areas experiencing continued growth even as the overall Western Cape market slows.

According to FNB’s property barometer, there has been considerable price strengthening in the City Near East (Observatory, Woodstock, Salt River), some parts of the Cape Flats and northern suburbs and in Somerset West, Strand and Gordon’s Bay.

While the City of Cape Town recorded an average house price growth of 8.7% for the second quarter of this year, the City Near Eastern suburbs showed price inflation of double that at 17.6%. The average house price growth for Somerset West, Strand and Gordon’s Bay was also convincing at 12% for the same period.

Pockets of strength are also evident at the upper end of the market, despite the current economic challenges. Val de Vie residential estate near Paarl, has seen record sales over the past 12 months, with resale transactions in excess of R885 million. This is a 61% increase from the previous year when property resales of R549m were concluded.

“With developer sales of over R338m for the past year, the total sales for Val de Vie are over R1.2 billion over this period,” says Surina du Toit, Pam Golding Properties area manager for Paarl, Wellington and Franschhoek.

“Val de Vie continues to perform well because of its diverse portfolio of properties. Prices in the Vines start at R4.1m for three-bedroom homes. There are also still plenty of plot-and-plan options that don’t include transfer costs. One can buy one of these new 320m2 builds for about R7m. Prices for developer plots start at about R2.29m,” she says.

The recent announcement of the R1.1 billion expansion of the V&A Waterfront, which includes an urban park and residential development, is expected to further boost interest in the Waterfront’s marina.

“Pam Golding Properties has concluded eight resales in the Yacht Club, including two apartments for R6.4m each,” says Mariel Burger, Pam Golding Properties agent for the V&A Waterfront and Mouille Point.

She says the rental market in this sought-after area is also performing well. Pam Golding Properties has concluded nine 12-month leases here with monthly rentals of between R12 500 and R20 000.