FNB data shows that house price growth in South Africa’s star performing region, the Western Cape, continued to taper off in the first quarter of 2017.
The year-on-year average house price growth for the Western Cape measured 6.2% in the first quarter, slower than the 7.7% rate of the previous quarter and now significantly slower than the 10.6% multi-year high recorded in the first quarter of last year.
However, the region’s average house price growth for the first quarter remained well above other major regions – the next fastest growth rate being a tame 1.1% year-on-year growth in the FNB Smaller 5 Provinces House Price Index which includes Mpumalanga, North West, Limpopo, Free State and Northern Cape Provinces.
KZN Province showed 1% growth, Gauteng was stagnant (0.7%), while the Eastern Cape declined 1%.
Household and property sector strategist at FNB Home Loans, John Loos, said that strong real house price growth in much of the Western Cape region has lead to a mounting affordability challenge.
Comparing the average price of homes transacted, according to the FNB House Price Indices, the Western Cape is the most expensive with an average price of R1.421 million, with Gauteng the 2nd most expensive at R1.041 million.
Since the beginning of 2010, the average house price for the Western Cape has risen cumulatively by 78.2%. By comparison, the next strongest growth was in KZN, with a far more moderate 46.4% and Gauteng with 41.2% over the same period.
Examining our FNB Major Metro House Price Indices, we see the slowest ones in the 4th quarter of 2016 to have been Nelson Mandela Bay with a -0.8% year-on-year decline, and Ethekwini with +0.2% change.
At the top end of the growth scale, the City of Cape Town’s 8.2% year-on-year rate continues to be a major driving force behind the broader Western Cape house price growth.