More young Cape Town buyers eye Jozi homes market
Category Blog
Johannesburg seems poised for another annual influx of young home buyers who choose to ‘semigrate’ inland from Cape Town rather than try and cope with its soaring home prices.
This year the process may gain added traction, given the impact on Capetonian morale of the city’s frustratingly prolonged water crisis.
Latest statistics* show that first-time buyers accounted for just 8% of all housing transactions concluded in Cape Town in the six months to end-March 2017.
The comparative figure for (more price-realistic) Johannesburg was 28,6%.
This is a clear reflection of the extent to which home prices in Cape Town have become unaffordable for most entry-level buyers in the city’s residential property market.
Recent year-on-year house price inflation has been as high as 20% in some areas, such as the City Bowl and the Atlantic Seaboard.
Whopping price rise
Looking at the longer term, Western Cape house prices have reportedly risen by a whopping 78,5% since 2010 – the year that marked the start of the recovery from the post-2008/9 recession.
This is more than double the rate (36 %) at which Gauteng home values climbed during the same period.
No wonder Cape Town has become the city with the lowest percentage of first-time home buyers in South Africa. Granted, the market has been slowing down recently, with the water crisis dampening scentiment severely in the city. But has not been significant enough to make it easier for first-time buyers.
(Average house prices in South Africa increased by roughly 10 % a year, compounded, over the past 60 to 70 years),
At current price levels, purchasing an entry-level home is clearly a financial bridge too far for most aspirant first-time home owners in the Mother City.
Furthermore, Cape Town home rentals have risen in line with home price inflation. This has made it unaffordable for both existing and prospective young tenants.
Gauteng a viable option
It is against this background that Gauteng, with its higher income structures, is once again perceived as a viable alternative option for first-time buyers who opt to resettle on the Highveld.
ighveld.
The home price thresholds of Gauteng Metros, and Johannesburg in particular, continue to present an affordable alternative to Cape Town – both from a purchase and rental perspective.
An added attraction is that cosmopolitan Johannesburg/Sandton is not only South Africa’s financial and commercial capital but also the doorway to, and from, the capital cities of sub-Saharan Africa, the rest of Africa, and the world at large.
First choice
While lower home prices are a key factor, they are not the only motivating force that makes Johannesburg first choice for young coastal families who choose to relocate inland.
The city’s effervescent entertainment hubs cater for all tastes, choices and preferences.
A prime example is Maboneng. Situated in downtown Johannesburg, it is a vibrant, world class, precinct of creativity – featuring an exciting mix of galleries, shops, theatre and cinema, fashion and design outlets, pubs and eateries.
Young, re-settling, ‘semigrants’ will love it!
*Source: FNB
Author: Ronald Ennik
