House prices in the Western Cape continue to outperform the rest of the country, with the province the only one to exceed 5% price growth. Lightstone data shows the province saw house price inflation of 5.7% as at the end of April, with the national average only 3.4%.
By comparison, the Eastern Cape was in second position with house price growth of 3.3%. The market has been ranging in the 2% to 5% zone “for some time now” following a slow down in recent months, says Lightstone analytics director Paul-Roux de Kock.
“The Western Cape still continues to outperform the rest of the provinces with an annual rate of 5.7%, despite a drop of more than three percentage points in the past 12 months.”
House price inflation by province:
- Western Cape: 5.7%
- Eastern Cape: 3.3%
- Northern Cape: 2.8%
- Free State: 2.8%
- KwaZulu-Natal: 2.7%
- Limpopo: 2.6%
- Gauteng: 2.4%
- North West: 2.1%
- Mpumalanga: 2.1%
The indices also show that coastal municipalities are generally performing above the national average. Although the Ekurhuleni, Tshwane, and Joburg metros are seeing “stable” growth of between 2% and 4%, growth in Cape Town, eTthekwini, and Nelson Mandela Bay ranges from about 3% to just above 4%.
Lighstone’s statistics also show full-title properties are seeing better price growth than sectional-title properties, although there is only a 0.4% difference.
Looking at price growth based on wealth segments, De Kock says low and mid value properties “continue to buck the trend” by growing at more than 4% annually.
Other property value types are seeing rates below this.
The index shows these variations:
- Luxury (above R1.5 million): 0.9%
- High value (R700 000 to R1.5m): 2.7%
- Mid-value (R250 000 to R700 000): 6.8%
- Low value (less than R250 000): 7.1%
However, the dip in price inflation for luxury property is not unique to South Africa. Knight Frank’s Q1 Prime Global Cities Index, which tracks luxury residential prices across 45 cities globally, registered its lowest rate of annual growth since the final quarter of 2009.
Two years ago, prime prices were rising at an average of 4.3% a year but has slowed to 1.3%. The report states: “Although still rising, the rate of wealth creation globally slowed in 2018.
The past six months saw political and economic headwinds intensify. In the first quarter of 2019, the threat of a global trade war loomed, uncertainty surrounding Brexit peaked, and the IMF projected that 70% of the world’s economies would see a slow down in growth in 2019.”
The rising cost of finance has also been a factor. Despite this, key European cities continue to outperform, with Berlin and Frankfurt showing growth rates of 14% and 10% respectively. The rates for Edinburgh and Paris are 8%.
“All four cities share three key attributes; strong tenant demand, limited new supply and affordability.” With a2.1% increase, Cape Town is in 19th position on the index.
The only other African city on the index is Nairobi in 42nd spot. New York and London are seeing negative growth rates of -5% and -5.1% respectively for their luxury property. The report analyses data from property in the top 5% of each city’s housing market.