South Africa’s second-largest housing market, the Western Cape, continued to have the lowest house price inflation in the country, fresh data showed on Thursday.
Price inflation in the province dropped from 12% in July to 11% in August, the Lightstone residential property index showed.
But KwaZulu-Natal showed a much steeper drop-off from 21% in August last year to 12% in August this year, and at this rate it could soon become the lowest price inflation province.
Of the major four provinces, Gauteng still appeared to be showing the slowest pace of decline in house price inflation, and is currently at 13%.
The Eastern Cape’s price inflation surpassed the other major provinces at 14%, but it also has been decelerating rapidly, coming down from 21% in August last year.
“Given the higher proportion of investment and holiday property demand in the coastal regions, these areas should be more cyclical than Gauteng, given [the] less essential nature of such buying,” said Andrew Watt, Lightstone Risk Management’s business development director.
He added that with rising interest rates, it was likely that potential inland buyers of coastal property would hold off for while, which would undermine prices more than in the primary-residence-dominated Gauteng.
“Hence it is expected that coastal provinces will bottom out in the cycle at significantly lower price inflation rates than will Gauteng,” said Watt. ‒ I-Net Bridge