Property Talk

Is Cape Town the only Metro in South Africa bucking the trend regarding house price growth? Financial Mail recently published an article indicating that the Cape Town residential property market has been flourishing despite the outlook for the national market being bearish. Two of South Africa's leading property economists, Absa's Jacques Du Toit and FNB's John Loos expect overall house price growth to dip below 5% for 2016 as a whole and to remain subdued through 2017. In June Absa's house price index recorded growth of 4,9% for the middle-segment of housing, down from 6,1% for 2015. The expectation is that this will slow to 4% during the remainder of 2016. FNB's home price index is currently still at a respectable 7,1% for the second quarter of 2016, but this figure has been skewed by the Western Cape's double digit performance of 12,1% in the second quarter, and Cape Town as a Metro's 16% growth in the same period. In comparison, over the same period, the City of Johannesburg prices grew by a mere 2%, Ethekwini by 3,4%, Ekurhuleni by 5% and Tshwane by 6,7%. Clearly something is happening in the Western Cape and in Cape Town in particular. The FM article indicates that the reasons for this exceptional performance is the significant rise in demand from buyers migrating from Gauteng to the Western Cape because of the province's better lifestyle offering, good selection of government schools and a perception that local government in the province is better run. Following our experience last week with voting in the local municipal elections across the country, this then begs the question as to the impact a DA run municipality can have on property prices. This will be an interesting aspect to watch over the next few years, especially for those areas that have more recently swung to a DA majority. Areas outside of the Cape Town Metro that are also benefitting from the migration of buyers from Gauteng are the Winelands with Estates such as Val de Vie and Pearl Valley in Paarl experiencing this first hand. For those of us familiar with the Dolphin Coast property market, we recognize the exact same type of semi-gration happening from Gauteng and Pretoria to the greater Ballito area. Our lifestyle for young families, I would argue is the best in the country - even better than Cape Town. Our schools within the area (mostly private) are world class. One competitive advantage we do enjoy is that the airport provides for exceptional quick and easy access to Gauteng making it a reality for many to still run businesses in and commute weekly to Johannesburg. If we consider a selection of flagship estates from Cape Town, the Winelands and the Dolphin Coast as a quick and easy proxy for the property markets across these comparative destinations, we get a clear understanding of how competitive the Dolphin Coast has become in attracting buyers. Using Lightstone data extracted from the deeds office and considering only 2014 and 2015 as recent complete and updated data sets for five keys estates - Steenberg Golf Estate, Val de Vie, Pearl Valley, Zimbali Coastal Resort and Simbithi Eco-Estate, the following interesting information is evident. Steenberg is the smallest (96 ha with only 239 freehold properties) with the highest pricing by far. It is mature and established and showed a median price of R11,5m in 2014 across 8 sales and R11,225,000 in 2015 across 10 sales. It has no sectional title opportunities. The current median price is R12,8m. Any major residential estate with a median price over R10m is impressive. Val de Vie is 202,86ha with 798 properties (118 sectional title and 680 freehold) with a current median price of 4,2m. Pearl Valley is 177,39ha with 591 properties (66 sectional title and 525 freehold) and a current median price of R5,6m. Our flagship Dolphin Coast estate is Zimbali Coastal Resort which is 441,74ha with 1,495 registered properties (638 sectional title and 857 freehold) and has a current median price of R7,4m, well in excess of both Pearl Valley and Val de Vie. Simbithi at 430ha has 1,678 registered properties according to the deeds office, with 687 being sectional title and 991 freehold. Simbithi has a current median price of R3,950,000.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com