An increasing number of housing regions across Cape Town continued to grow at a slower rate in Q2 2018.
This is according to FNB’s City of Cape Town Sub-Regional House Price Index, which showed that nine out of 12 regions saw price growth slowing in the 2nd quarter.
“Despite good recent rains and signs of drought alleviation in the region, which is good for its economy and sentiment, we remain of the belief that poor levels of home affordability in the region, after strong house price growth in recent years, will cause house price growth to continue to slow in the near term, with household incomes in the region being required to catch up with house prices before we can see another strong house price growth period,” said John Loos, FNB household and property sector strategist, noting that in Q2 the City of Cape Town’s estimated average house price growth rate continued to slow, recording 8.7% year-on-year. “This year-on-year price growth rate represents the eighth consecutive quarter of slowing from a 10-year revised high of 15.4% recorded in Q2 2016.”
Atlantic Seaboard plummets off its high perch
The most expensive sub-region in the City of Cape Town Metro, i.e. 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 27.7% year-on-year in the final quarter of 2016 to 1.9% by Q2 2018, and now has the slowest price growth of all City of Cape Town regions.
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 23.9% in Q2 2016, to 9.7% by Q2 2018.
Southern Suburbs cools
The Southern Suburbs saw further slowdown from 8.6% in the prior quarter to 7.4% in Q2 2018, having gradually slowed from a multi-year high of 15.9% in Q2 2015.
East defies gravity
“The “near Eastern Suburbs” sub-region, however, continues to ‘defy gravity’ for the time being at least, it would appear,” said Loos. “In 2016, this region’s price growth had also begun to slow. However, more recently it appeared to see a slight resumption of growth acceleration, from 16% year-on-year in Q2 2017 to 17.6% in Q2 2018.”
Northern Suburbs move sideways
Home affordability has also deteriorated in the Northern Suburbs too: two out of three major Northern Suburbs sub-regions still saw double-digit average house price growth rates in Q2 2018, with one moving into single-digits.
“The Western Seaboard Sub-Region (including Blouberg, Milnerton and Melkbosstrand) saw a slowing in year-on-year price growth, from 14.3% in Q3 2017 to 10.2% by Q2 2018,” said Loos. “This is the most noticeable slowing in price growth off the highest base of the three Northern sub-regions.
“The ‘Bellville-Parow and Surroundings’ sub-region also saw its price growth slow, from 11.9% year-on-year in the final quarter of 2017 to 11.2% in Q2 2018, after prior quarters of strengthening.
“The Durbanville-Kraaifontein-Brackenfell sub-region also started to slow slightly, from 10.1% growth in Q1 2018 to 9.9% in Q2 2018.”