The 2nd quarter FNB Western Cape House Price Index showed further year-on-year house price growth acceleration in the province. FNB’s valuers perceive the City of Cape Town Metro to be a stronger residential market than the country areas, and we are of the opinion that the more affordably-priced segments of the market have contributed more to price growth in the region. However, a strained global economy, and indicators pointing to a simultaneous Western Cape economic weakening, could imply near term slowing in the Province’s house price growth once more.
The FNB Western Cape House Price Index for the 2nd quarter of 2012 showed a further acceleration in its year-on-year growth rate, from a rate of 7.5 percent in the previous quarter to 8.7 percent. This has been the 4th consecutive quarter of year-on-year growth acceleration, according to the latest revised figures.
On a quarter-on-quarter basis, however, the growth rate slowed slightly in the 2nd quarter, from a previous 2.5 percent to 2.3 percent, but this remains a very healthy quarter-on-quarter rate.
This price growth is very slightly above the national average year-on-year growth rate of 8.6 percent for the 2nd quarter.
The recent relatively solid period in house price growth appears to have been driven more by the Full Title segment than the Sectional Title segment. This is believed to be due to the Sectional Title segment perhaps still suffering more heavily from the overhang of a stronger supply of new stock built a few years ago during the boom. The sectional title market also appeared to be a major target of buy-to-let buyers in the boom years, and buy-to-let demand still remains mediocre by comparison to back then.
In the Full Title segment, the Affordable Housing segment is believed to have been a key driver in recent times, boosting the 2 bedroom sub-segment, while the relatively stable established family demand is the driving force behind what appears to be a pretty solid 3 bedroom Full Title market.
By area price bands in the Western Cape, it appears that, as a rule of thumb, the lower priced areas have mildly outperformed the upper end of late, which I guess is still a reflection of the financial pressures that households face, and perhaps, too, the rising costs related to operating homes, i.e. in the form of rates and tariff increases, notably electricity.
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