By John Loos, FNB Property Economist
Through 2017 and into early 2018, we saw growth in average Western Cape house prices slow from previous double-digit growth rates to low single digits. We had expected this for no other reason than, after a lengthy period of strong house price growth in the region, ultimately it became less affordable for many, with price growth exceeding growth in average incomes in the region. Aspirant first time buyers have battled in recent years to enter the Western Cape to a far greater extent than those upcountry in Gauteng. Also, the stream of affluent migrants from the rest of the country into the Western Cape slowed somewhat in 2017.
On top of affordability constraints, the Western Cape is in the midst of a severe drought, which may well have impacted negatively on its economy and thus its housing market as well. The drought, however, will pass, and the Western Cape will remain a prime region and a major economy in South Africa. Also, the Western Cape’s natural land scarcity relative to landlocked Gauteng should keep the region’s house prices the highest in the country in the longer term.