Lies, damned lies, and statistics
Semigration driving Cape Town prices
BY LEW GEFFEN
I
n life, according to the late British Prime Minister Benjamin Disraeli, one will encounter three kinds of lies:“ lies, damned lies, and statistics”. It’ s the latter— by at least a country mile— that causes the most problems in the property market.
Both industry and consumers share equal blame for cherry-picking the numbers that suit their current narrative, and discarding by the bushel others that may offer a different and sometimes more unpleasant big picture. But while there’ s a measure of comfort in taking the ostrich approach, selective employment of statistics is jeopardising the future stability of South Africa’ s last remaining consistently lucrative investment region, which is the Western Cape and Cape Town in particular.
One of the most significant drivers of the region’ s rampant but satisfying house price inflation rate for sellers in recent years has been the now firmly entrenched culture of“ semigration”; a net inflow of repeat buyers into the province from other parts of the country, particularly Gauteng.
Cape Town’ s peak was in early 2016, when the Gauteng property market was still vibrant, despite an ailing national economy. In the intervening months, though, the picture has changed significantly across the country, although this wouldn’ t be immediately apparent if one was to look at the Cape Town market statistics in isolation.
A Property Barometer compiled by FNB reviewing the Cape Town market over the second quarter of 2017 paints a fairly rosy picture – at least at the beginning. Using Deeds Office data, FNB compiled a set of house price indices for key sub-regions in the City of Cape Town Metro using a repeat sales methodology, which was then combined to get an overall picture of the city’ s property market.
What they found was that in the 2nd quarter of 2017, the City of Cape Town’ s estimated average house price growth rate remained in double-digit territory to the tune of 13.8 % yearon-year.
It’ s the only major market in the country to have shown growth in double digits, and the report further notes that the Atlantic Seaboard and City Bowl are“ red hot”.
To quote FNB Property Economist John Loos:“ On the landscarce Cape Peninsula, the two most expensive sub-regions in the City of Cape Town Metro, i. e. the Atlantic Seaboard and the City Bowl, continued to be the hottest markets in the Metro despite some mild price growth slowing.
“ The Atlantic Seaboard average house price inflation rate moderated only very slightly, from a multi-year high of 30.1 % year-on-year in the 1st quarter of 2017 to 29.9 % in the 2nd quarter. The City Bowl has seen slightly more slowing, from its 22.7 % year-on-year high in the 2nd quarter of 2016 to 21.1 % in the 2nd quarter of this year, but it too remained red hot.
“ Slower, but still strong, are the Southern Suburbs with 14.7 % year-on-year growth, and the“ Near Eastern Suburbs”( including amongst others Salt River, Woodstock and Pinelands) with
32 SEPTEMBER 2017 SA Real Estate Investor Magazine