Property insights, Cape Town market continues to soar
Cape Town is fast becoming a hub in SA for financial and other services, creatives, and a tech hub with head offices such as Amazon and Takealot. Aside from a steady stream of semigration buyers from all over the country, wealthy property investors and international buyers continue to invest more into property here.
While the market has seen an inevitable slowdown due to the higher interest rate, we have already seen nearly 2,000 sales transactions worth around R9.3 billion recorded on Propstats, these being mostly sales by participating agencies. This includes the Hout Bay/Llandudno area with some 125 sales worth nearly R600 million already concluded.
Over the last 10-years, the Cape Town Metro has transformed into the "jewel in the crown" of the SA property market. While the beautiful location between mountain and sea is a big contributor, the City itself under the DA management has also worked actively to improve services and tourism as additional key drivers of the demand for property.
Since the 2010 FIFA World Cup, we have seen tourism and events grow exponentially. This includes the Rugby Sevens Tournament, the Cycle Tour, Two Oceans Marathon and more recently, the Formula E event which boosted the economy by over R1 billion.
While the Cape Town property market also faced slower volumes during the Global Financial Crisis of 2008, water crisis and more recently, the Covid Lockdowns, it has nonetheless achieved the best price growth over the 10-year period to 2021 according to a StatsSA House Price Index.
It shows that Cape Town is the hottest property market with price appreciation of a whopping 141% compared to 71% across Johannesburg and 91% in Tshwane/Pretoria. Twice as many high value sales have taken place in Cape Town compared to the upper end of Sandton and Johannesburg.
This is also well reflected in the Hout Bay/Llandudno property market where the growth has been steady over the last ten years. Lightstone data shows that the market was trending at around 250 annual transactions in the 2018 to 2020 period. This spiked to 400 and 450 for the 2021 and 2022 years. The value traded rose from the previous high of R1 billion to over R1.3 billion in 2022.
The average selling price increased from R2.8 million in 2012 to R3.5 million in 2021 and spiked to R4.4 million in 2022. It currently stands at R4.7 million for 2023. Only around 12% of sales fall below R2 million (mostly apartments and plots). 60% of sales are between R2 million to R5 million. 29% of sales fall above R5 million including an increasing number of sales above R10 million.
Llandudno enjoyed two years of tremendous sales with a significant volume of sales above R18 million, the highest since the last boom in 2017/8 being recorded last year (2022). The rental market in Hout Bay/Llandudno also continues to grow on the back of the strong demand for the lifestyle and better services.
Aside from local buyers investing in the area, we continue seeing high demand from semigration buyers as well as local and international buyers investing.
While there is no doubt that the higher interest rate is impacting on overall sales volumes and prices, it is arguably still better to be a seller in Cape Town compared to elsewhere. If you are a buyer, then the excellent growth combined with the fabulous lifestyle should be an added incentive to invest now.