Living all the way out in a home in Oudtshoorn has more than a few advantages, not the least of all is a stable real estate growth rate. Far enough from the effects of drought has certainly helped this but Cape Town hasn't been as fortunate in that regard. But, even with the effects of the drought slowing down, the local real estate market hasn't recovered as well as many hoped it would.
The real cause appears to have little to do with a water crisis or even South Africa’s current recession woes. In fact, the prime real estate along Cape Town’s Atlantic Seaboard seems more likely to have reached a temporary peak. Having always been in high demand, prices soared until more recently when an apartment in the area could go for over R40 million.
FNB stated that, “The most expensive sub-region in the City of Cape Town Metro, i.e. the Atlantic Seaboard, has seen its average house price growth slow the most sharply off the highest base, from a revised multi-year high of 27.7% year-on-year in the final quarter of 2016 to 1.9% by the second quarter of 2018, and now has the slowest price growth of all of our City of Cape Town regions.”
At this stage there are bitterly few South Africans who could realistically afford property at that price, which means a slowdown in real estate. According to FNB analysts, household incomes need time to increase sufficiently to place properties back in reach and, until then, investors are rare. This is not to say that Cape Town is a bad investment location. The city continues to enjoy one of the highest growth rates in the country.
