South Africa’s property market had a good year in 2016, according to a recent global property report.
In the report, two South African cities ranked higher in terms of property value growth than wealthier global counterparts including Milan, Tokyo and Moscow.
In 92nd place out of 150 cities is Cape Town, which saw property values grow by 3.9% last year, topping major cities that include Paris and New York.
Johannesburg came in at number 109 with a steady 2.2% growth last year, which experts say is good, but still beneath the global 6.6% average, according to the 2017 Knight Frank Global Residential Cities Index.
The index looks at the property markets of 150 cities to determine the average increase in property values over 12 months.
“The lifestyle that Cape Town offers is exceptional and hard to beat for the sort of money you pay to live here,” CEO of Dogon Group Properties, Denise Dogon, said.
“With the way it (Cape Town) has developed in terms of restaurants and infrastructure and all the awards it has won, the report doesn’t surprise me. It’s also one of the safer cities as crime is generally confined to certain areas.”
Durban’s property ranking dropped into the bottom 10 worldwide with a negative growth of -5.1%, which Pam Golding CEO Andrew Golding says is an unfair generalisation.
“I think that Durban, like many of the cities on that list, has many pockets that are great performers, so to throw a blanket over a whole city isn’t really a great indicator. But, in fairness, the Western Cape has been outperforming everywhere else and in 2016 Joburg and Durban had certainly been lagging behind,” Golding says.
The reason was that Cape Town saw an above-normal migration of people owing to the perception of the lifestyle it offered. Another important factor was that it benefitted the most from foreigners who invested there. But all this might change after the recent economic downgrades.
“Our experience of what is happening in the market was before the downgrade. We have not been able to assess the market yet because March is a good month for the residential property industry and April is a slower month because of the holidays. By the end of May, we will have a much better picture,” Golding said.
He said property investors now needed to make wise choices.
Smaller factors such as the street where you lived could make a significant difference in the value of your investment. There was also an uptake in sectional title properties and a trend towards inner-city living.
Security demands were driving a section of the market significantly and first time owners were getting older, which was drastically affecting the rental market.