Cape Town property fundamentals strong despite election jitters

Cape Town property fundamentals strong despite election jitters

Category Market Update

Analysts continue pointing to the Cape Town property market as the strongest, and it is likely to remain the case for the foreseeable future. Deeds Office data shows that the metro still achieves the best prices on average, both in terms of sales and rentals.

The market is supported by a number of underlying factors which add to the demand such as semigration, international buyers, and a strong tourism market with the introduction of Nomad Visas finally announced recently.

The City also continues to achieve as the best managed metro in the country in a number of metrics including service delivery. Mayor, Geordin Hill-Lewis has shown his commitment to creating a City which is conducive to growth, tourism and job creation with plans to spend R120 billion over the next ten years on infrastructure development.

Over the next three years alone, the City will invest R39.7 billion in infrastructure with construction alone expected to create around 130 000 jobs. A well-managed metro with plans for further infrastructure development is good news and will further support a strong property market.

Property transaction data clearly shows that there is a lot more confidence in the property market in Cape Town compared to Johannesburg (the powerhouse of South Africa, and wealthiest city on the continent).

Lightstone data shows that the percentage of transactions below R1.5 million is very similar in Cape Town (71.28%) versus Johannesburg (71.04%) as a percentage of overall transactions. The average price for Cape Town last year is R1.9 million, 26% higher compared to five years ago compared to R1.4 million for Johannesburg,  only 16% higher.

The contrast between the two property markets is more pronounced at the top end above R3 million where Cape Town shows an average transaction price of R6.9 million compared to R4 million for the Johannesburg Metro.

Data from the Rode Report shows that Cape Town has some of the lowest vacancy rates in the country for flat rentals at only 2.5%. Considering that many flats are holiday and Airbnb rentals, that is very encouraging for investors.

Tourist arrivals by air into Cape Town for the first three months were 16% higher compared to the same period last year, and surpassed the pre-pandemic levels.

With Cape Town consistently ranking as one of the best cities in the world in which to live and own property, a key take-out is that it is still better to be a property seller in Cape Town compared to elsewhere in the country. The same goes for investing in property, and for those considering purchasing, the good news is that the market still largely favours buyers.

Author: Gina Meintjes