Commenting on John Loos’ latest FNB House Price Index (March 2014), which says that the property market is solid and that property prices have risen 8,6% year on year, Lanice Steward, managing director of Knight Frank Residential SA, has said that, while it is good to see the property market stabilising nationally, it is even better to see Cape Town property prices trending higher than last year and still higher than the national average.
Loos’ report shows that real price growth in February is 2,48% and the national average price of houses is R951 490. This is slightly below the 2,6% real price growth of January.
The report also says that the House Price Index is well up on levels of a decade ago, up at a figure of 26,1% from February 2004, so the property market is in a healthy position, says Steward, as you would usually look at the long term growth figures for property and not always the monthly or yearly growth. Property is usually a long term investment, and investors would usually see capital growth after five years, with the ideal investment period being longer than ten years, she said.
“If you were to look at the turning point of the market after the market crash, which was in February and March 2011, at 1,2% year on year change, you can see that this has been trending in a positive direction since then to the present 8,6% figure, which is the highest.”
“We have seen evidence of this in the increase in activity in the market,” said Steward, “but there is still a shortage of stock in certain price categories.”
Comparing these figures to PropStats (the Institute of Estate Agents Western Cape property data service) which tend to be the southern suburbs of Cape Town and Atlantic Seaboard based, the average house price from March 2013 to March 2014 is R2,445,477, whereas the year before that the average selling price of homes was R2,119,486. This indicates an increase year on year of 15%.
“When we last checked these figures at the beginning of this year,” said Steward, “the year on year growth was 14,5%, which shows that the Cape Town market is stable. Development will be a key to unlocking units to sell and we hope that as banks continue to be more inclined to grant bonds and lend, so the rate of development should increase once more. ”
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