(Photo by: Peter Titmuss/UCG/Universal Images Group via Getty Images)
Social media has been aflutter with complaints about rental and property prices in Cape Town, considered the ideal place for strung out work-from-homers to escape Joburg’s hustle and bustle — and its service delivery woes.
Like it or not, the so-called semigration trend looks like it is here to stay, according to property specialists. But with property prices in the Mother City expected to remain high, more people will look at further flung areas to move to.
“Are there any Cape Town rental agents on here that I can ask a question? Just wanted to know if it’s meth? That you and your landlord clients smoke?,” one Twitter user recently asked in a thread that provoked more than 1 500 retweets.
It’s a question that bears answering. A quick search on Property24 shows that the cheapest two-bedroom apartment on the rental market in Illovo, a suburb of Sandton, goes for R9 200. The flat, which has had its price reduced, has a solar geyser, two parking bays and a floor size of 97m².
The cheapest apartment in Vredehoek, near the Cape Town’s City Bowl, on the lower slopes of Table Mountain, will cost R13 500 a month. It has one parking bay and floor space of 80m². For the same price in Illovo, you could rent a flat with a 127 m² floor size and an extra bathroom.
If you have the money to buy, the cheapest apartment in Vredehoek has two bedrooms and is going for R1.75 million. For that amount, you could buy a four-bedroom flat in Illovo. That listing has also been reduced.
Andrew Golding, chief executive of Pam Golding, said semigration is a trend that is set to continue into 2023 and beyond.
He said the trend has been around for far longer than its Covid-related explosion. “There has just been a natural flow — sometimes in both directions but obviously more recently in one direction — from the north of the country to the south of the country,” he said.
“There is no question that it has increased in recent times … but it was always there.”
Golding noted that there has already been a change in the semigration trend, which initially saw a wave of buyers looking for property in Cape Town, but is now broadening its reach to the Western Cape more generally and to parts of the Eastern Cape. This is as many have effectively been priced out of the Cape Town market.
“All of those places have experienced significant trends of influx of potential buyers and those trends are all related to the relative affordability, ” he added.
“So if Cape Town is not affordable, then perhaps smaller towns up the East Coast and up the West Coast are affordable and are therefore experiencing a significant influx of buyers.”
On the flip side, Johannesburg’s property market has been left with an oversupply of listings, leaving the negotiating power more so in the buyers hands, Golding said.
According to FNB’s recently released property barometer, the property market outlook for the first quarter of 2022 was less optimistic in the last three months of 2022. “Notably, the reduced expectations were primarily driven by agents in the affordable market, with 46% expecting an increase in activity in the next three months, down from 62% in the previous quarter.”
The FNB report also noted that on an index out of 10, the Western Cape recorded higher activity at 7.0, Eastern Cape at 6.4, Gauteng at 5.8 and KwaZulu-Natal at 5.7 in the fourth quarter of 2022. At 55 days, properties in the Western Cape were also on the market for the shortest time, followed by Gauteng at 69 days, Eastern Cape at 73 days and KwaZulu-Natal at 79 days.
“This constant flux between buyer and seller is not unusual. It is the opposite in the Western Cape, where there is a shortage of stock and where, in effect, the negotiating leverage is in the hands of the seller,” Golding noted.
“But that doesn’t mean that the number of transactions you have in Johannesburg is necessarily going to be diminished.”
The higher level of interest rates, which have inevitably put a damper on demand for property, have probably also induced a natural slowdown in the Johannesburg real estate market, Golding said.
“Our expectation for house price growth in Johannesburg is going to be less than perhaps the Western Cape, but these things always go in cycles,” he added.
“And Johannesburg is still the powerhouse of the country and there is still a very vibrant property market. So it is not as though there is a collapse in any shape or form, there is just a different dynamic in terms of pricing and the volume of sales.”
Remote work, which became more appealing because of the pandemic, was a catalyst for the semigration trend, but the search for better service delivery has kept it going.
Golding, as well as Adrian Goslett, the regional director and chief executive of RE/MAX SA, both noted that there has been far more of a semigration from KwaZulu-Natal than previously in the wake of that province’s service delivery failures.
The work-from-home phenomenon, Goslett remarked, might have pushed people that were sitting on the fence to make the move down to the coast. “I do see it continuing. Where we are going to put people, I have no idea,” he added.
Property in Cape Town is expensive — and has been for some time, Goslett said. “If you move down from Joburg, after having a home in the Northern suburbs, and you come to Cape Town, it is going to be a mental adjustment,” he said.
“Because four beds becomes three or three beds becomes two, if you’re wanting the same price. And maybe it’s not in the equivalent of a Bryanston or a Fourways. So that becomes an adjustment …. And because there is more and more demand, the prices stay where they are.”
Goslett said he doesn’t see property prices in Cape Town coming down soon. “This is in a market that really should be a bit muted because interest rates have gone up, but there is still that high demand.”
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