Property Investment Cape Town

Property Barometer – inter-provincial repeat buyer migration trends

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The Western Cape remains positioned as the most popular repeat buyer destination, according to FNB’s latest 2017 Inter-provincial Repeat Buyer Migration study. The popularity appears to have dwindled somewhat, and the pace of net migration into the province noticeably slowed last year. 

FNB anticipated this slowdown on the back of residential property affordability in the region having deteriorated markedly after a strong housing market run in that region in the recent years. Additionally, the region’s severe drought conditions may also be starting to dampen sentiment of aspirant ‘semi-grants’ towards the region.

For the purpose of this study, FNB identified all purchased by individuals where there is a corresponding sale by the same individual within a six month period, prior to their purchase (some who relocate may purchase a new home in advance of the sale of their old one), to up to eighteen months after that purchase (an adjustment from prior studies where FNB took a shorter period of only up to six months subsequent to the purchase).

The national inter-provincial repeat home buyer migration picture 

The inter-provincial repeat buyer migration picture shows 2017 to have been another year of increase in the rate of inter-provincial migration relative to overall repeat home buying. From 15.9% of total repeat property buying being estimated to be inter-provincial repeat buying in 2016, the estimate rose to 16.2% in 2017. This is now significantly higher than the 6.2% lows reached around 2009/10 just after the last recession.

For a time, following the 2008/9 recession, FNB believes the rising trend from 2011 was largely the lagged response to a return to positive economic growth after the 2008/9 recession.

Improved economic growth increases the level of employment and economic opportunity, in turn raising the mobility of labour, which drives a greater level of inter-regional migration.

However, from 2012 onward economic growth stagnated once more, and while that heightened mobility can linger for some time after a good growth period, FNB does not believe that this ongoing rise in the inter-provincial migration percentage could solely be due to the lagged impact of that post-2009 economic recovery.

Rather, FNB believes that it has also been very much due to a greater search for “quality of life” or “lifestyle” by the country’s higher income people. This includes a significant number of working people who have the financial and increasingly the technological means to work remotely from their place of employment, or away from their business or their client base, and relocate across the country in search of greater quality of life.

It also includes a very significant number of retiring people, especially from the great Metros ofbarometer-2715600_1920 Gauteng, searching for a “quieter” coastal or rural life, either in a coastal city or in a smaller town, coastal or inland.

The Western Cape remained the most popular repeat buyer destination in 2017, but had diminished significantly in popularity compared with 2016

Great technological advancements, along with the emergence of low cost airlines making transport increasingly affordable for higher income individuals, may have been key in promoting this heightened migration level between provinces.

The Western Cape Province has over the past decade or so been benefiting from this search for quality of life, having managed to successfully brand itself as a great “lifestyle” province, in addition to being one which has been relatively well run at provincial government level, as well as at local government level in may districts, including most notably the City of Cape Town Metro. The natural environment of the region has also helped to promote its attractiveness as a “semi-gration” destination.

The Western Cape maintains its competitive advantage in terms of attracting and retaining repeat home buyers, which represents a significant portion of the country’s skilled labour force along with higher income retirees. This competitive advantage is seen the fact that, according to this study, the Western Cape had the strongest net inward migration (inward migrating repeat buyers minus outbound ones) rate of repeat buyers from other provinces, of all 9 provinces. However, also clear from the 2017 numbers was that the Western Cape saw a very significant weakening in this net inflow rate in 2017. The Net Inflow of Repeat Property Buyers to the Western Cape was estimated at +8.4% of total repeat home buyers in that province, still strong but well down from the +13.7% estimate for 2016, the net result of a higher departure rate in 2017 along with a lower arrival rate.

The Eastern Cape’s net inflow rate also declined from +1.7% in 2016 to +0.8% in 2017.

However, the other 2 of the Big 4 provinces saw improvements in their net outflow rates, KZN from -3.3% of total repeat buying in 2016 to -2.5% in 2017. Gauteng had the most significant improvement off the lowest base, improving its net outflow of repeat home buyers from -6.9% of its total repeat buyers in 2016 to a lesser -3.4% in 2017.

Conclusion

It is important not to lose sight of the fact that the Western Cape still had the strongest net inflow of repeat home buyers of any region. However, its net inflow was significantly weakened from 2016, while Gauteng’s had started to improve markedly off a weak base. FNB believes that 2018 will see more improvement for Gauteng, and weakening in the Western Cape, the latter province being hampered by significantly worse home affordability along with a severe drought. Gauteng of late experiences a relatively affordable housing market, driving very strong recent 1st time buying and, perhaps, beginning to persuade a greater number of aspirant “semi-grants” to the Western Cape region to stay where they are at least for the time being.

These latest repeat buyer migration figures contribute in part to our belief that the Western Cape housing market could under perform in 2018, while Gauteng could be heading into a significantly stronger property period, and may yet become the outperforming region.

Favourite ‘semi-grant’ destinations 

Finally, FNB examines the most popular destinations for each province’s repeat buyer “semi-grant” populations. For Gauteng, the Western Cape is the most popular destination for its “semi-grants”, with 52.96% of its outbound repeat home buyers heading for that province in 2017. Of the Big 4 provinces, the other one whose “semi-grants” overwhelmingly favour the Western Cape are those from the Eastern Cape, with 47.44% of that province’s outbound repeat home buyers heading for the Western Cape. KZN, however, saw 47.97% of its outbound repeat buyers heading for Gauteng in 2017, making Gauteng still their most popular destination, followed by 35.16% of its outbound repeat buyers heading for the Western Cape.

For outbound repeat home buyers from the Western Cape, Gauteng remains the most popular destination, with 65.93% of this group headed there in 2017, followed by 12.97% headed to the Eastern Cape.

Read more here: FNB Property Barometer -Regional Migration Trends – March 2018

 

Sourcehttps://propertywheel.co.za/2018/03/property-barometer-inter-provincial-repeat-buyer-migration-trends/