If you bought your property in Randfontein or around Gauteng then you’ve had to option of observing the Mother City’s woes from a relatively safe distance. The draught saw the city’s dam levels reach record lows and plunge it into a near state of panic as administrators groped around for a solution and citizens flocked to stores for as many bottles of water as they could carry in an attempt to stock up.
Fortunately things have drastically improved over the course of the winter with a greater than anticipated rainfall saving the city from disaster level protocol being enacted, which could have seen residents queing for water as taps were turned off. Needless to say the concern this situation warranted impact the local property market as well with price growth slowing in year-on-year comparisons.
According to John Loos, household and property sector strategist at FNB, the water crisis wasn’t the only challenge facing Captownian investors. “Despite good recent rains and signs of drought alleviation in the region, which is good for its economy and sentiment, we remain of the belief that poor levels of home affordability in the region, after strong house price growth in recent years, will cause house price growth to continue to slow in the near term,” he said. Essentially property prices in Cape Town had grown so quickly over recent years that the market was due for a slow down, until household incomes increased to accommodate them.
The areas which are seeing the best return to previous growth numbers are those which hadn’t escalated as quickly previously. The exception, for the moment, being the ‘Near Eastern Suburbs’ sub-region’, which continues to “defy gravity for the time being at least, it would appear”, said Loos. Property along the Atlantic Seaboard, being the most highly in demand previously, currently shows some of the slowest growth as the rest of the city makes an effort to catch up.
