Absa’s latest report on average house price growth of 1.3%, from January to September this year shows a downward trend from 2% in 2011, and a far cry from the 7% growth of 2010. Plus, economists are estimating average percentage growth over the next three to five years to remain in the region of 2%, while inflation is hovering close to 6% at the 5.78% mark.
It would make sense then that when properties in good locations have comfortably beaten inflation for at least four years, it can be considered as good potential buying material. It also means that more buyers will find themselves in the company of likeminded potential owners, gravitating toward a good geographical location and an area showing above-average capital growth, likely to continue doing so in the long term.
When looking at some Western Cape high performing residential areas, such as the Atlantic and Western Seaboards, signs that promote strong short and long term growth present itself clearly. These would include infrastructural changes, planned and implemented from provincial level down to regional and suburban locations, of both commercial and residential developments, as well as public amenities such as transport, to schools and hospitals.
The FNB Homeloans Property Barometer, together with Deeds Office data analysis of repeat buyer inter-provincial migrations trends in August this year, showed the Western Cape to continue outperforming the other eight provinces in terms of its ability to attract repeat home buyers from other provinces. Some of the latest market trends reveal an increasing fondness of repeat property buyers investing in Cape Town, either for re-location or semi-gration purposes. This is typically when parents purchase second homes for studying children or holidays, or when families re-locate and partners commute to the workplace in upcountry areas. Another growing trend is demand for well priced property in security estates in country and suburban locations, in convenient locations close to retail facilities and schools.
In addition is the Financial Mail Top Suburbs Survey in partnership with Lighstone in October 2012, where Graanendal Estate in Durbanville showed the highest capital growth in house prices of 16.7% for one year to September, both nationally and in Cape Town. This survey singled out SA’s top five suburbs in the four biggest cities, namely Johannesburg, Pretoria, Cape Town and Durban over periods of one, three and five years, and in three different price categories. This northern suburb estate recorded the highest growth figures of all South African suburbs in the year to date, substantially higher than the 1.3% average growth for the year to date.
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André Brink, land owner and developer of Graanendal Residential Estate believes that various factors, such as the commitment to building quality plot and plan units, plus the addition of Graanendal Shopping Centre contribute to ongoing growth of the estate. In catering for middle-income property owners looking for affordable starter homes, as well as mature couples in the process of scaling down, this estate provides a superior quality lifestyle within a secure, rural setting and convenient location.
Following shortly on Graanendal’s tracks in the survey, also illustrating demand for estate living was the exclusive Sunset Links near Melbosstrand, showing growth over one year of 16,5%. Located between Milnerton and Table View, Sunset Links ranks as SA's best-performing suburb overall, notching up impressive price growth of 36,7% and 36,5% respectively over three and five years.
When considering that the Atlantic Seaboard’s prime location at Clifton, reputed as Cape Town's second-biggest money-spinner, achieved growth of a much lower 21,3% and 23,8% over three and five years, then both short and long term growth as seen at Sunset Links is remarkable.