Cape Town house price growth is now the weakest of SA's cities
- As recently as in 2016, Cape Town property prices rose by 11% in a year.
- Those days are long over, and the city now has the weakest growth of all the big metros.
- Of the provinces, Mpumalanga and North West show the biggest price gains.
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In the heady days of just five years ago, Cape Town property prices grew by more than 11% in a year.
Now, the latest data from the property research group Lightstone show that house prices in the City of Cape Town rose by only 2.2% in the year to November.
This is the weakest rate of all the big metros.
In Nelson Mandela Bay municipality, house prices grew by 7% over the same period, followed by Ekurhuleni (+3.5%), Tshwane (+3.4%), Johannesburg (+3.3%) and Ethekwini (+3.1%).
While SA house prices have defied grim expectations in the pandemic, growing by almost 4% in the year to February – luxury homes (defined as properties above R1.5 million) underperformed compared to cheaper properties.
This may have weighed on the Cape Town property market, which has some of the country’s priciest suburbs. Due to global lockdowns, the city has also been starved of its usual stream of foreign buyers.
The latest Lightstone provincial numbers show that the North West (+7.2%) and Mpumalanga (+6.9%) saw the strongest property price growth.
Property prices in South Africa have been supported by the lowest mortgage rates in almost half a century. With prime at 7%, this means a monthly repayment of less than R8,000 a month on a bond of R1 million.
The low mortgage rates are incentivising renters to buy, and there has been an increase in first-time buyers and applications for 100% bonds.
Lockdown has also created an appetite for bigger properties, with many South Africans still working from home.
Price growth of freehold properties (+4.1%) continued to outperform sectional title (+3.2%) in the year to February.
FNB senior economist Siphamandla Mkhwanazi previously said prospective home buyers may have reassessed their housing needs as a result of life in lockdown, fuelling a demand for bigger properties (mainly freestanding homes) – and not only in SA’s biggest cities.
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