The Western Cape housing market including Cape Town is strong by national standards but are there limits to how long this market strength can continue.
The recent strength of the Western Cape housing market has been driven to a significant degree by demand from external sources, including buying by foreigners and more significantly by South African repeat home buyers migrating from other parts of the country.
This is a healthy driver of market strength caused by the province having managed to build a strong brand as a destination, which has a strong economy, is well managed and has a great lifestyle.
Property prices in Western Cape have increased by 54% over the past 5 years however in certain parts of Cape Town including The Atlantic Seaboard, City Bowl and Hout Bay have doubled in value.
John Loos property strategist from FNB has said that he did not believe the Western Cape had experienced an over exuberant and speculative home buying spree as the entire country had prior to 2008. He said Western Cape average house price inflation peaked at 10.8% in the first quarter, which was only marginally ahead of the prime rate percentage and therefore never created a massive “speculator’s paradise” as had happened at the height of the boom in 2004/2008