Photo: Flickr / Khalid Al-Ajmi
Photo: Flickr / Khalid Al-Ajmi
The much-maligned Cape Town property market is going through something of a slump at the moment. The industry has flipped from favouring sellers to buyers within a matter of months after house prices in four key regions of the Mother City experienced a deflation.
A study released by FNB charts just how the real estate market is struggling in the south-west. Cape Town is notorious for its extortionate rental rates, and house prices across the metro have been criticised for being “over the odds”.
Where Cape Town property prices are dropping
As MoneyWeb points out, average prices on the Atlantic Seaboard declined by 5.1% year-on-year in the first quarter of 2019, a figure only made worse by the 4% rate of inflation. It’s not the only upmarket area struggling to improve on its accumulated value, either:
| Locations | Performance vs last quarter | Performance vs Q1 2019 |
| Atlantic Seaboard | -2.5% | -5.1% |
| Eastern Suburbs | 0.3% | -4.2% |
| City Bowl | -0.2% | -2% |
| Southern Suburbs | 0.5% | -2.4% |
Worst-affected areas
The likes of Sea Point and Camps Bay are experiencing one of the more dramatic slumps of the lot. The last few months of 2018 were a killer for the market and contributed to a +5% decrease on last year. Heading out to Woodstock and Salt River in the Eastern Suburbs, and the story is similar – yearly growth has rapidly gone backwards.
The once-invincible City Bowl – where buyers scrap tooth and nail to find their next property – is also enduring a tough time. Meanwhile, the overall yearly growth rate for the entirety of Cape Town stands at 1.2%: The slowest recorded by FNB since the end of 2009.
In stark contrast, there’s been a significant boom in property right on the edge of the Cape Town Municipality, bordering Stellenbosch. Elsies River, Blue Downs and Macassar have seen house prices rise by more than 10% since last year. The Cape Flats have also enjoyed a boost, with an increase of 11 -12% for their house prices.
Why are Cape Town property prices falling?
For a start, affordability remains a key issue. The reason people aren’t buying as frequently is because they are being priced out of moves. This has had an invariable effect on the Cape Town property market over the past year, sending house prices plummeting.
FNB economist Siphamandla Mkhwanazi also explained to the publication that the market is currently going through a cycle: The ratio between property prices and earnings should soon “normalise” according to the expert, leading to a more “meaningful improvement in affordability”.
