Cape Town Property Booming.
The stunning Sea Point Promenade.
Despite national economic conditions that would not normally be considered conducive to a healthy Property Market, Cape Town property is experiencing boom conditions when compared to the rest of the country and these conditions are generally expected to continue for the foreseeable future.
The Cape Town market when compared to Johannesburg realised more property sales, at a higher value per sale and experienced greater appreciation in property values.
The natural beauty of Hout Bay.
So what is driving this property boom in Cape Town?
Supply and Demand, the basics that drive any market. Prior to 2008 we saw an increase in supply driven by an insatiable desire for property with many new projects being sold out on launch, but the sudden recession of 2007/8 saw an abrupt end to this frenzy, a glut of supply combined with sharp increases in interest rates saw many buy to let investors and home owners frantically shedding their investment properties and homes, even at a loss, desperate to reduce their costs as rentals fell and monthly bond payments rose dramatically.
This led to a virtual stand still in new property developments and was followed by a few years of declining property values combined with a reluctance of the banks to issue new bonds.
World class wines, from hundreds of stunning local Wine Farms.
The end of the Recession, and improved economic conditions.
Just like all GOOD things must come to an end so too must all BAD things eventually end.
Ultimately life goes on, we have now seen interest rates drop back to the lowest levels in many years in an attempt to spur economic growth, banks are slowly granting bonds more easily again and the glut of property that was dumped onto the market seven years ago has since been absorbed with new developments being sluggish to pick up to previous levels.
We are also seeing a return to the market of first time buyers who would have bought a few years ago, but didn’t qualify for a bond under the stricter regulations or couldn’t afford the monthly interest rate payments then, but who are now in a better position to do so.
V&A Waterfront, one of Cape Town’s biggest tourist attractions.
But why Cape Town?
The short answer to this question is, why not Cape Town. Cape Town has been blessed with an embarrassment of natural beauty, from the stunning Blue Flag beaches to the Majestic Mountains that tower protectively over the expansive Winelands.
Cape Town offers an incredible lifestyle and variety of living for all stages and walks of life, from the serenity of the Southern Peninsula to the hustle and bustle of the upgraded and improved CBD/Waterfront to the sprawling Northern Suburbs and West Coast. Cape Town caters seamlessly for the budget conscious to the Ultra Rich.
Without getting into a political debate, Cape Town is generally accepted as being the best run city in the country and is constantly ranked as one of the top 10 cities in the world to visit. Given the choice many South Africans would prefer to live in Cape Town.
The Cape Town property market is benefiting from what we refer to affectionately as semi-gration as people from the North move South, with certain suburbs claiming as much as 20% of property being purchased by people re-locating from Johannesburg/Pretoria.
Other suburbs are reporting that 10% of properties are being purchased by foreigners, up 30% on the previous year, testament to Cape Towns growing international renown and tourism industry.
Cape Town offers some great schools and educational institutions.
Some Interesting Stats on the Cape Town Property Market.
(Taken from a recent article written by Samuel Seeff)
Number of Property Transactions for Cape Town last year:………..11 487
Number of Property Transactions for Johannesburg last year:…….11 307
Value of Property Transactions Cape Town:…..…..…..…..…R20bn.
Value of Property Transactions Johannesburg:…………………R13.7bn.
According to the latest FNB Western Cape House Price Index, Cape property appreciated at around 14.9% on average, well above last year’s national average of 6% to 8%.
Last year, WealthInsight (a London wealth consultancy) released data that pointed to the Cape as being home to almost 600 properties valued at more than R20 million, almost twice as many as Johannesburg. It also ranked Cape Town in the top 20 second home buying destinations among global multi-millionaires.
Trophy home sales across the city more than doubled year-on-year to about R1.506 billion (about 51 sales) compared to 26 sales worth R762 million in 2013. This includes about seven sales above R40 million, the highest number ever, with prices ranging to R65 million and R70 million on the Atlantic Seaboard and R69 million in the Southern Suburbs (Bishopscourt).