Nestled below the world famous Table Mountain, Cape Town is known for the beauty of its countrysideand beaches, as well as its regional vineyards and cuisine. It is also increasingly renowned for its culture, including a growing number of art galleries and museums, notably UNESCO-listed Robben Island.
Cape Town has maintained a successful property market for many years, driven by inward migration from other parts of South Africa and beyond by those looking for economic opportunities as well as a high quality lifestyle and stunning surroundings. Booming tourism and demand for short term rental property has also driven investors to the market. Airbnb reported a 65% year on year growth in guest arrivals in 2018 in South Africa, with one million guests in the last year alone and the majority choosing to visit Cape Town.
Driven by demand from inside and outside Africa, house price growth averaged 9.1% per annum between 2012 and 2017. There are signs that the housing market is slowing down, with annual house price growth of 8.7% year on year in July 2018.
This is partly driven by deteriorating affordability following many years of high house price growth, which has outpaced wage growth. The biggest price correction can be seen in the cost of high end luxury properties, creating new opportunities to invest in attractive housing nearest to Table Mountain.
A second factor is the severe drought that affected the Western Cape province in 2018, reducing output in the agricultural sector. Concerns over water scarcity have created uncertainty over the past year, and are likely to drive a softening in demand within the housing market.
However, the inherent attractiveness of Cape Town as a place to live, work and visit will ensure that the housing market will thrive for many years to come.