Believe it or not, however, but there are sub-regions in the metro that are almost growing at double this rate.
Using deeds office data, FNB has compiled the City of Cape Town Sub-Regional House Price Index, which shows than in Q4 2016 the best performers were all close to Table Mountain.
Why are the already most expensive suburbs in Cape Town showing the strongest house price growth? Even off their high bases?
“We believe it to be the combination of a number of factors,” said John Loos, FNB household and property sector strategist. “Importantly, as far as cities go, the upmarket City Bowl and Atlantic Seaboard have natural beauty and outdoor lifestyle, facilitated by the recreational potential of Table Mountain and the other mountainous areas, and by the sea. The major upgrade to the CBD over the years, and the addition of manmade attractions such as the V&A Waterfront, have added greatly to the City Bowl and surrounding areas having become fashionable for the affluent.
“Many wealthy residential buyers come from inland regions such as Gauteng, while the City Bowl and Atlantic Seaboard are able to attract a greater percentage of foreign buyers too, relative to the rest of Cape Town and relative to other SA cities, it would appear. The outperformance of the Western Seaboard and City Bowl is reflective of a craving of the wealthy for quality city lifestyle.”
Table Mountain also creates a major land restriction for new property development, and growing traffic congestion means living closer to the city is an increasing priority for residents.
“Finally, there is probably a little over-exuberance in especially the City Bowl and Atlantic Seaboard sub-regions, something that can creep into a market after some years of strong house price growth performance, causing investors to buy based on recent growth, expecting it to continue into the future,” said Loos, noting that this is a customary human characteristic in strong markets, which can cause market “overshoots” from time to time. “While these areas around the mountain, especially the City Bowl and Atlantic Seaboard, are currently experiencing something of a ‘golden era’, ultimately their lack of supply and exorbitant house price levels (by SA standards) can create problems for them in terms of making it tough for certain very important professionals, such as teachers, nurses and academics, to live or work in such areas. That can ultimately pose a threat to the standard of certain important services in such areas.”
Loos adds two answers: It is important for Cape Town to achieve a high-quality public transport solution to ease traffic congestion; and, secondly, shifting a greater portion of economic activity to more decentralised business nodes (the Northern Suburbs as well as to previously neglected areas such as the Cape Flats).
Year-on-year house price growth
#1 22.9% – Atlantic Seaboard (from Green Point through Clifton and all the way to Hout Bay)
#2 20.1% – City Bowl region
#3 15.8% – City Near Eastern Suburbs (includes Woodstock and Salt River, and stretches east as far as Pinelands)
#4 14.7 – Southern Peninsula (includes Fishoek, Kommetjie and Simons Town)
#5 11.6% – Southern Suburbs
#1 104.4% – Atlantic Seaboard
#2 89.9% – City Bowl
#3 73.7% – City Near Eastern Suburbs
#4 63.6% – Southern Suburbs
#5 61.7% – Southern Peninsula