Buckle up homeowners, it’s going to be a tough ride.

Property group Pam Golding has published its annual property market review report, and things aren’t looking that great.

The report measured the performance of major property markets over the past year, and also gives some insight into what lies ahead.

While the year started out well, the full effects of State Capture have started to become apparent. As a result, growth forecasts were halved (now 0,7%), and the economy unexpectedly slipped into recession during the first half of 2018.

Here’s BusinessTech with the effects of this on the property market:

While the Western Cape still outperformed most other markets, Pam Golding noted that it was driven at the expense of other markets, rather than local organic growth.

“The relative outperformance in the Western Cape was, to an extent, achieved at the expense of the rest of the national housing market – with semigrants selling their homes in Gauteng and relocating to the Cape, for example,” it said.

The South African market is undergoing a change that sees “the old driver”, the Western Cape, being replaced by “new drivers” in Gauteng and KZN.

“The areas of growth in the market now are not necessarily the well-established high-end suburbs but currently the more affordable areas which are not out of the reach of South Africa’ numerous less affluent buyers,” it said.

Rentals in Cape Town are trending downwards, while other areas are showing growth.

During the 12-month period under review, Western Cape sales accounted for 24.8% of total sales. The impact of semigration on total sales is evident,  Pam Golding said, with the Cape accounting for an increasing percentage of total sales between 2013 and 2016 when it rose from 20% to about 30%.

Since then it has declined to roughly 25%, possibly due to the water crisis, alongside the deterioration in affordability.

The following graphs illustrate where Cape Town’s property market is right now:

Over the same period recorded above, unit sales in Gauteng accounted for 42,3% of total sales, where sales have remained steady at between 40-45% since 2010, whereas Cape Town is clearly experiencing a decline.

The deteriorating economy has negatively affected the housing market. House price inflation has slowed from 4,72% in December 2017 to 3,99% in September 2018.

National house price inflation averaged 4.87% last year compared to an average of 4.37% during the year to date.

Regionally, in terms of house price inflation, the Western Cape continues to slow (7.95% in September) however the region’s prices are still rising at double the pace of the rest of SA, while KZN inflation is currently 4.27% and Gauteng 2.83%

Interestingly, the East Rand has seen the strongest recovery among the Gauteng metro housing markets.

The Western Cape has boasted the strongest rental market in South Africa in recent years, but has weakened significantly in the second half of 2018.

National house price inflation averaged 4.87% last year compared to an average of 4.37% during the year to date.

Regionally, in terms of house price inflation, the Western Cape continues to slow (7.95% in September) however the region’s prices are still rising at double the pace of the rest of SA, while KZN inflation is currently 4.27% and Gauteng 2.83%.

Overall, not the best news for homeowners in Cape Town.

But hey, at least you own a home.

[source:businesstech]