Cape Town house prices still top performers

Cape Town - Although KwaZulu-Natal has overtaken the Cape as the top performing regional residential property market in terms of house price growth, Cape Town continues to dominate, Dr Andrew Golding, CEO of Pam Golding Properties (PGP) said on Monday.  

A comparison of the four metro regions shows clearly that house prices in the Cape Town metro are outperforming the others by a considerable margin, followed by Tshwane (Pretoria), Johannesburg and eThekwini (Durban metro), according to the latest PGP Residential House Price Index.

He said that notwithstanding the fact that house price inflation at a provincial level appears to be losing momentum, within the country’s major metropolitan areas prices continue to accelerate, registering healthy growth rates.

Limited land availability within these areas, combined with rapid urbanisation and migration between metros, with a steady influx of people seeking economic opportunities, are contributing to a steady increase in metro house prices.

KwaZulu-Natal

From mid-2013 to early-2015, the Western Cape enjoyed the strongest house price inflation among the three major provinces, Golding explained.

However, acceleration in the rate of growth in house prices in KZN saw the province begin to outperform the Cape in early 2015. Since then KZN house prices have continued to strengthen while the other major provinces - and South Africa overall - have experienced a slowdown in the pace of house price inflation.

"Looking at the various price bands within KZN, it becomes clear that the region’s outperformance has been driven by strong growth in the upper price band above R2m and, to a lesser extent, healthy growth in the lower price band below R1m," said Golding.

In contrast, the middle price band from R1m to R2m has performed broadly in line with the overall market.

The strong growth in the upper price band in KZN of 19.69% year-on-year in April, is out of sync with the slowdown evident in top-end house prices in Gauteng (3.92%) and the Western Cape (0.68%), according to Golding.

"However, growth in this category in KZN has now peaked and is beginning to lose momentum, which will ultimately bring it back in line with the top-end performance in the other major regions."

Gauteng

During the past decade, house price inflation in Johannesburg and Tshwane has closely tracked the performance of house prices in Gauteng as a whole.

"However, in recent months, as house price inflation in the province has started to soften, price inflation in Johannesburg and, to a greater extent in Tshwane, has accelerated," said Golding.

The last time growth in metro house prices exceeded growth in the province overall was in the early 2000s - ahead of the 2004 housing boom.

Western Cape

In the Western Cape average regional house price inflation is clearly losing momentum, while Cape metro house prices have accelerated sharply since mid-2014, according to Golding.

"It is the first time that this stark divergence between metro and provincial house prices has been recorded since 2000."

The acceleration in house prices in the Cape metro is largely attributable to the severe stock shortages experienced in many suburbs as well as the geographical limits on land available for development.

The continued relocation of homeowners from other provinces further underpins this trend.

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