FNB has released its Cape Town property barometer for the first quarter of 2018, looking at which suburbs have seen the most growth.
It found that while the majority of regions still show relatively strong growth, 8 of the 12 defined sub-regions saw their year-on-year growth slow in the first quarter of 2018 – with the slowest growth rate now recorded in the City’s most expensive region, the Atlantic Seaboard.
“However, in the more affordable regions the slowing trend is less apparent than the higher priced end, with certain of these sub-regions even showing recent price growth accelerations,” said FNB’s property sector strategist, John Loos.
“This, we believe, continues to be the result of the relative unaffordability in higher end sub-regions after recent years of strong price growth, encouraging a search for relative affordability lower down the price ladder in the more affordable sub-regions,” he said.
Mountain and the City Bowl
In the first quarter of 2018, Loos said that FNB saw further slowing in house price growth in the City Bowl and the other major 3 sub-regions closest to the City Bowl (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 subregions 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,” he said.
He added that the most expensive sub-region in the City of Cape Town Metro, 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 first 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%,” he said.
“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 second quarter of 2015,” he said.
Reflective of this heightened search for relative affordability, Loos said that FNB had found that the most affordable sub-region within close proximity to the City Bowl, 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,” he said.
This rapid price inflation has been seen in other areas further outside of the city including the northern suburbs, Western Seaboard Sub-Region (including Blouberg, Milnerton and Melkbosstrand) as well as the Cape Flats, Loos said.