Those who own property in George after moving there from Cape Town may well be thanking their instincts on regarding the timing as the Mother City struggles to reestablish its growth rate to pre-drought levels. With dam levels exceeding predictions at this point, and doing well compared to their levels last year at this time, one might have thought the property market would shoot back up. This, however, does not appear to be on the cards.
While Cape Town property remains one of the best investments with some of the highest market growth the slow down of that rate has not gone away with the drought. Of course the entire country now faces a recession which will certainly play a role but the primary issue behind the lack of property movement appears to be that Cape Town had already temporarily peaked.
Before the drought, property growth was high and according to an FNB analyst this may be more on point. “Despite good recent rains and signs of drought alleviation in the region, which is good for its economy and sentiment, we remain of the belief that poor levels of home affordability in the region, after strong house price growth in recent years, will cause house price growth to continue to slow in the near term,” said John Loos, household and property sector strategist at FNB.
The market appears to need to give investors some breathing room as household incomes take time to attain some parity with local real estate prices. Other areas in the Mother City which had grown more slowly are now showing steady performance as the Atlantic Seaboard slows down.