The Western Cape has become one of South Africa’s highest priced places to buy a house. The rise in property costs has been majorly attributed to the fact that the province has the second fastest growing economy, and has therefore attracted repeat purchases from South Africa’s more affluent population. Indeed, statements released by FNB’s property sector strategist John Loos indicate that the rate of house price inflation in the region stood at 7.7 percent as of the second quarter of 2015.These figures are the highest when compared to those of Eastern Cape, Free State, Gauteng, and KwaZulu-Natal which make up South Africa’s four largest provinces.
Confidence in the Region
According to research reports released through an FNB Estate Agent survey, the residents of Western Cape are said to be more confident in the region’s future than occupants of the other major provinces in the country. This is on account of the province having significantly high land scarcity, and coming only second to Gauteng in terms per capita income. Home buyers are therefore acquiring property in the region to not just live in in future, but to also let to other residents as a long-term investment. In view of this, only 4.5 percent—compared to the national average of 9 percent—of the province’s homeowner’s are selling their homes with the intention of relocating to other areas of South Africa. Overall, the level of departure from the region has been significantly low.
The survey also indicates that the average time it took for a home to sell went down to 9.1 weeks from 12.1 weeks between the second and third quarters of 2013. Again, there has been a trend noted among buyers; with up to 25 percent of them being first time homeowners, a rise from the 21 percent was realised in the first quarter of 2015. Prospective buyers looking to own a home in the area can expect to part with an average R1, 230, 487, thus making Western Cape the locality with South Africa’s most expensive properties.
Looming Changes in the Region’s Housing Sector
Even though the rate of price inflation was at 7.7 percent as of the end of the second quarter in 2015, the figures have been indicated to be much lower than those experienced in 2014 where the average price inflation had risen by 10.4 percent. Nonetheless, while Western Cape hosts some of the country’s priciest homes, the trend is set to take a turn in future as the effects of the tapering global economy take a toll on the region’s growth.