Arguably the biggest lesson coming out of the growth of the Cape property market and continued influx of people moving to the metro from other regions, is that service delivery matters.
Over the last 5-7 years, the pace of relocations to the Cape has picked up pace and as we can see from the latest information coming out of the market. The Cape is still streets ahead of any other area in the country, recording double digit year-on-year price growth of around 14% - 20% on average compared to a paltry national average of around 6% - 8% at best.
The growth in stature of the Cape has fuelled demand and consequently boosted price growth and property values. Over the last five years, prices in the Cape have grown at two to three times that of Johannesburg and Pretoria.
Moneyed South Africans, especially those from the wealthy enclaves in Johannesburg, Sandton and Pretoria East, but also from other regions in the country, will pay about 20% - 40% more for Cape property.
If we look at the property market over the last five years in particular, it is clear that High Net-Worth South Africans spend up to 40% more on Cape property compared to anywhere else in the country. This becomes very evident when we look at sales activity above R20 million.
Only around ten sales, priced to R60 million were recorded for the wealthy suburbs of Johannesburg and Sandton for the whole of last year. Comparatively, some 67 sales above R20 million were recorded for the Cape metro alone priced to around R73m to R75m in Clifton and Fresnaye and as much as R290m in Bantry Bay for a double plot and super luxury house.
Where only about five Joburg/Sandton suburbs achieved R20m-plus sales last year, some twelve Cape Town suburbs achieved such sales.
By May this year, there has already been 40 sales priced upwards of R20m recorded for the Cape metro – the Atlantic Seaboard, City Bowl and Southern Suburbs (Bishopscourt, Constantia) generating just over R1bn in property sales revenue. Of these, 30% (12 sales) were to Johannesburg buyers along with a handful to buyers from KZN and a Namibian buyer. Only a handful of sales were to foreigners, mostly UK and German buyers.
It is also not just the top end areas, in fact across the city, agents are reporting an influx of buyers and people looking for rental property. The influx can be felt as far as the Garden Route. On the other hand, many of our Johannesburg and Pretoria branches report an increase in stock for sale as a result of residents looking to sell up and move to the Cape.
While the wealthy can and do spend considerably more on property in the Cape, it becomes a bit more challenging for the middle-income group who need to spend up to 20% more for Cape property. While prices are a bit of a barrier, it seems that these buyers are prepared to forego space and luxuries to rather invest in property in the Cape.
Land sizes are generally smaller in the Cape, as are the houses, especially when you look at the Atlantic Seaboard, although there are of course exceptions in Bishopscourt and Constantia. What you get in Cape Town though, is the fabulous location and lifestyle, underpinned by confidence and a more solid foundation, service delivery and an intolerance for corruption.
The Cape property market is a confluence of factors, all of which support the demand for property and consequently ever higher prices and premiums that buyers are prepared to pay. In addition to a functioning city and excellent infrastructure including a top class international airport with daily flights to almost anywhere in the world, you have a fabulous coastal location and land scarcity.
The Cape region is well marketed internationally and ranks amongst the most sought-after tourist destinations in the world. You are also not just coming to a coastal city, but have quick access to the surrounding coastal areas with the Garden Route about six hours’ drive. The Winelands, from the Swartland to the Paarl/Franschhoek Valley, up to Tulbagh and down to Stellenbosch and Somerset West are close by.
There is also so much to do and see here that you will certainly not be bored as a resident. The inner city regeneration has been the case study to emulate. That, in turn has led to a vibrant café culture with many areas offering superb dining and nightlife.
The Cape is also home to some of the best ranked private and government schools in the country and tends to occupy top spots in the annual matric results. The two top university, Stellenbosch and UCT, draw students from across the country and globe with many ending up staying in the Cape or migrating here at a later stage.
The Cape attracts buyers from across the continent and world, not just from other provinces. It is a sunny alternative to the cold northern region winters and you will often find UK and Northern Europeans investing in second homes here. These so-called ‘swallows’ then migrate to the Cape to escape the cold northern hemisphere winters and enjoy the wonderfully sunny climate that South Africa is globally renowned for.
While the credit downgrades, noisy political landscape and lack of clarity in terms of the way forward for the economy, has already affected the top end of the market, we do expect that it will still be the top end areas of the Cape that will attract the highest prices over the next few years.
While traffic is a rising problem as a result of the influx of people and higher demands on the infrastructure, you can still get around the city in about 45 minutes to an hour, quicker if you are in the high demand areas such as the Atlantic Seaboard, City Bowl and Southern Suburbs.