Cape property market slower, but still streets ahead

Late September saw one of the most anticipated events in the country, being the opening of the Zeitz MOCAA, the first contemporary art museum for the continent. It is quite spectacular and certainly adds a whole new dimension to Cape Town.

A visit to the museum is a must-do for anyone in the city and for visitors. The Zeitz MOCAA is located in the new Silo District which is adjacent to the already popular V&A Waterfront which incidentally ranks as the most visited landmark in the country and possibly the continent.

This new district also includes a new Radisson Red hotel, another first for the country and continent along with other attractions and apartment complexes. According to recent media reports, these apartments are already selling for excellent prices.

As we welcome the warmer summer months and the arrival of tourists and hopefully more interest in property, both from a sales and rentals perspective, it is important to pause and reflect on the state of the property market. The latest FNB Property Barometers point out that although the Cape property market still seems to be well ahead of the rest of the country, it is now showing clear signs of a slow-down both in terms of the number of properties sold as well as the price growth.

Nonetheless, price growth for the metro stands at 8.4%, well above the other metros although the banks notes that the growth rate is slowing notably in line with the overall economic pressure.

The FNB Barometer further shows that Western Cape prices have grown by 50.4% over the last five years (Q3:2012-Q3:2017), practically twice as fast as any other region. Comparatively, Gauteng prices only rose by 22.6%, the Eastern Cape by 26.8%, KZN by 29.9% and the other smaller regions by 20.3%.

The above demonstrates the strong confidence shown in Cape property compared to other metros. FNB however, points out that overall, investment buying is slowing due to the weak economic climate and investor concerns.

It notes that buy-to-let buying has slowed somewhat and now represents 8.23% of total home buying. At the same time, there has been an increase in investment properties being put on the market, although not to any alarming degree. It only notes that some sellers have had to accept prices below what they originally paid.

What this points to, is an overall slowing market with fewer buyers who now have more choice, lower overall demand and that buyers are now looking for negotiability.

That said, we continue seeing good activity in the market, both from a sales and rentals perspective, but the lesson is always to ensure that you sign up with a credible agent to maximise your chances of selling or finding a good tenant.