IN AND AROUND THE CAPE PENINSULA THE CITY’S MOST EXPENSIVE MARKETS CONTINUED TO SHOW THE CLEAREST SIGNS OF SLOWING PRICE GROWTH IN THE 1ST QUARTER. Atlantic Seaboard, has seen its price growth slow the fastest off the highest base, while in certain more affordable sub-regions of the City there has still been some growth acceleration.
In the 1st quarter of 2018, we saw further slowing in house price growth in the City Bowl and the other major 3 sub-regions closest to the City Bowl, i.e. in and around the Cape Peninsula.
These sub-regions near to the city and the mountain have shown some of the strongest house price inflation of all of the Cape Town sub-regions over the past 5 years, and this prior deterioration in home affordability appears to have led to slowing demand, and thus price growth, in recent quarters.
The most expensive sub-region in the City of Cape Town Metro, i.e. the Atlantic Seaboard, has seen its average house price growth slow the most sharply off the highest base, from a revised multi-year high of 27.5% year-on-year in the final quarter of 2016 to 2.3% by the 1st quarter of 2018.
This does not surprise us, as this sub-region has experienced the most rapid cumulative growth of all the sub-regions over the past 5 years, to the tune of 111%.
The City Bowl started its price growth slowdown a little earlier than the Atlantic Seaboard, and has gone from its revised multi-year year-on-year growth high of 23.6% in the 2nd quarter of 2016 to 10.0% by the 1st quarter of 2018.
The Southern Suburbs, the other one of the “most expensive 3” sub-regions, saw further slowdown from 10.1% in the prior quarter to 8.4% in the 1st quarter of 2018, having gradually slowed from a multi-year high of 16.1% in the 2nd quarter of 2015.
Arguably reflective of the heightened search for relative affordability in or near to Cape Town’s prime place of employment, the City Bowl, is the indication that the most affordable sub-region within close proximity to the City Bowl, i.e. the Near Eastern Suburbs sub-region (including amongst others Salt River, Woodstock and Pinelands), shows the fastest house price growth of these “Major 4” sub-regions in or near to the Cape Peninsula.
Proximity to the City Bowl (and for that matter to Claremont Business Node) is becoming increasingly important as the city’s traffic congestion deteriorates. From a 19.4% high in the 1st quarter of 2016, the Near Eastern Suburbs House Price Index has also seen year-on-year growth slowing, but less significantly than the others, to reach 13.4% by the 1st quarter of 2018. It now has the fastest price growth rate of the Major 4 sub-regions surrounding Table Mountain.
THE TREND OF SLOWING GROWTH IS LESS PRONOUNCED IN THE MORE AFFORDABLE SUBURBAN MARKETS, AND SOME SUB-REGIONS EVEN SHOW STRENGTHENING PRICE GROWTH.
Further away from Table Mountain, in Cape Town’s more affordable suburban areas, the pattern of “slowdown” in price growth remains less clear, and there has even been some acceleration in certain sub-regions. We remain of the belief that the extremely high prices in the areas close to the City Bowl may have been encouraging a portion of aspirant buyers to shift their home search to these more “affordable” City of Cape Town housing markets a little further away, in search of greater affordability.
All 3 major Northern Suburbs sub-saw double-digit average house price growth rates in the 1st quarter of 2018, with 1 out of the 3 showing a growth acceleration.
The Western Seaboard Sub-Region (including Blouberg, Milnerton and Melkbosstrand) saw a slowing in year-on-year price growth, from 14.7% in the previous quarter to 14.4% in the 1st quarter of 2018, the 2nd successive quarter of slowing growth.
The “Bellville-Parow and Surroundings” sub-region also saw its price growth slow, from 11.4% year-on-year in the final quarter of 2017 to 10.8% in the 1st quarter of 2018, after prior quarters of strengthening.
However, the Durbanville – Kraaifontein – Brackenfell sub-region continued to accelerate mildly, from 9.8% growth in the final quarter of 2017 to 10.1% in the 1st quarter of 2018.
Moving into even more affordable regions, ones which incorporate many of the city’s Apartheid Era former so-called “Coloured” and “Black” Areas, we have recently seen price growth accelerations.
This, too, we believe could reflect a mounting search for relative affordability after rapid price inflation in the higher priced “suburban” areas in recent years.
Therefore, we have seen the Cape Flats House Price Index experience a further growth acceleration, from 11.4% year-on-year in the previous quarter to 11.6% in the 1st quarter of 2018. The Elsies River-Blue Downs-Macassar Region has also seen house price growth accelerate further to reach 25% year-on-year, from 23.7% in the previous quarter.
In short, in the 1st quarter of 2018, the City of Cape Town has seen further mild slowing in average house price growth for the 7th consecutive quarter, although the most recent 10.0% year-on-year growth rate remains strong.
Source: John Loos FNB Property Barometer