New data shows major economic shift to Cape Town – spelling problems for Gauteng

0
133

StatsSA housing data for July indicated moderate year-over-year growth in new planning activity. For the three months to July 2022, the national growth rate in approved residential building plans was 13.76% year on year.

“We were pleasantly surprised by this growth,” says John Loos, real estate sector strategist at FNB Commercial Property Finance. Given the Reserve Bank’s steady rate hike from late 2021, “we had already expected some slowdown in planning activity,” he said.

And if we go into the provincial breakdowns, the data shows that two of the three major provinces are showing signs of slowing down. Gauteng showed a 17.8% year-over-year decline for the three months to July 2022, while KwaZulu Natal rose just 1%.

The Western Cape appears to be largely responsible for the positive national growth of approved housing plans, Loos said. “This county continues to produce signs of significant outperformance, with approved housing plans growing at a very strong 50.76% year-over-year for the three months to July.”

“This strong growth leads to an increasing chance that Western Cape’s annual building plans adopted for 2022 may surpass Gauteng’s for the first time in history. That is important, because Gauteng is still by far the largest provincial economy and also the province with the largest population,” said the real estate expert.

In the year to July was 37.3% of the national total, above Gauteng (28.2%) and KZN (14.3%).

The relative picture was similar for completed residential buildings, Western Cape with 46.7% of the national share in terms of the number of units, Gauteng – 30.3% and KZN – 9.8%.

See also  Texas woman in agony has to wait five days to terminate nonviable pregnancy

“The meteoric rise in the share of approved plans and completed plans in the Western Cape is not the only trend that has caught my eye,” Loos said.

The decline in Gauteng’s share is also an important feature of recent years. In 2019, Gauteng’s share of approved plans accounted for 48.5% of the total completed plans and 55.7% just before this significant multi-year decline.

Years of building a popular ‘brand’ as a lifestyle and well-run region seems to be increasingly paying off for the economy and property market of the Western Cape,” said Loos.

“While it cannot be ruled out that issues affecting data are reported, we believe that this shift in the relative share of the development market is moving from Gauteng to the Western Cape and to a lesser extent, points out KZN a longer-term “economy shift” to the coastal regions.”

Loos said FNB has noticed it for over two decades an increasing “net emigration” trend of educated and higher-income households, especially towards the Western Capebut also to certain KZN coastal areas.

“This has led to expectations that the Western Cape economy would at some point outperform the rest, as SA’s modern service-dominated economy relies heavily on a skilled labor force, and the Western Cape is the best at attracting and retaining these.”

See also  Empowerment Project Fails: Shack Residents Say They Can't Pay Solar Company's Monthly Fees

In addition, skilled migrants provide significant purchasing power in the region, he said.

“So the relatively strong housing planning and completion activity is likely to be much more than just housing demand from a recent wave of emigrants in the region. It is more likely that the region’s economy will start to outperform the rest, propelling it into a larger housing development market, as job and income growth in the province starts to outperform the other provinces.” says Loos.

At the same time, the data may indicate: an increasingly troubled economy of Gautenga bigger exodus of skills there with the opposite effect on its economy, he said.

Property prices

The Q2 ’22 Oobarometer stats published by home financial experts, Ooba Group, show lower-than-expected home price inflation from the last quarter, which has led to real estate becoming more affordable in certain regions, prompting homebuyers to take larger deposits. can pour.

“It is interesting to compare buying behavior in the different regions and to identify areas where home buyers give priority to deposits. Deposits are a great way to reduce the size of their monthly and total home loan repayments and to negotiate a better interest rate from the banks,” said Jackie Smith, head of Buyers Trust, a subsidiary of Ooba Group.

“While the Oobarometer noted only 0.4% growth in the price of real estate on a quarterly basis, the average size of deposits grew by 16.4%. We also found that in many regions, the average deposit size was significantly higher than the national average of 7.8%,” Smith said.

See also  Activist investor pushes Kohl's to oust its CEO and chairman

Ooba’s average purchase price of R1.431.712 in the second quarter of 2022 showed a moderate growth of 1.8% compared to R 1,407,071 in the second quarter of 2021.

The group’s data shows that the average approved bond size of R1,320,225 increased by 2.4% year-on-year. The average size of new-buyer approved bonds grew by 4.4% to R1,056,574 in the second quarter of 2022.

“In the Western Cape, the region where most homes are currently being bought, the average size of deposits is no less than 17%. This can be attributed to increased immigration and the scarcity of real estate in the region, forcing homebuyers to make a larger down payment to secure their dream home,” Smith said.

Province Average price Average Deposit % of price
western cape R1 878 701 R315 470 17%
Northern Cape R1 406 818 R158 787 11%
Mpumalanga R1 125 834 R91 524 8%
KwaZulu Natal R1 342 494 R154 761 13%
Limpopo and Polokwane R1 406 818 R158 787 11%
Gauteng South and East Rand R1 136 767 R108 408 9%
Gauteng North and West R1 629 511 R164 431 11%
Free State R1 010 647 R86 357 8%
eastern cape R1 422 213 R204 625 14%

Read: Average house price in South Africa vs 15 years ago

.

LEAVE A REPLY

Please enter your comment!
Please enter your name here