PROPERTY: W Cape Outperform Other Provinces
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According to the latest FNB Home Loans Property Barometer findings, announced today, the Western Cape continues to outperform the other 8 provinces in terms of its ability to attract repeat home buyers from other provinces.
The review draws on information emanating from FNB’s Estate Agent Survey, as well as Deeds Office data analysis regarding repeat buyer inter-provincial migration trends.
About the positive findings in Cape Town, John Loos, FNB Household Sector and Property Economist says, “In economies that are services-dominant, such as South Africa, the ability to attract skilled labour is crucial, because skills drive such economies. As such, an indicator of a country or region’s ability to attract and retain skilled migrants is arguably one useful indicator of a region’s economic competitiveness.”
According to Loos, “Looking at residential property transactions can provide an indicator of the competitiveness of SA’s different regions”. These indicators refer to the level of emigration-related selling of property, “semi-gration”-related selling and foreign buying in the region.
“Although popular, Cape Town suffers a residential market mediocrity similar to other major regions currently, which is a function of a weak global economy and significant financial weakness in its household sector. However, when it comes to indicators of long term confidence in the various regions, Cape Town comes out generally better than the rest,” continues Loos
The city has the second lowest emigration selling rate of the major cities, with 2.7% of total sellers selling in order to emigrate since the beginning of 2011, compared to the national average of 4%, according to the estimates of the sample of agents surveyed.
When it comes to sellers selling in order to re-locate to another part of SA (semi-gration), Cape Town is noticeably lower than all of the other major cities with a percentage of 5.7% (National average having been 8%). Agents estimates of the number of foreign buyers of a region’s properties, expressed as a percentage of total buying, show Cape Town having a higher percentage of foreign buyers than the rest of the major metros, i.e. 5% since early-2011.
Breaking it down by province, results found the Western Cape to have the lowest net outbound re-location rate of 10.7% of total repeat buyers (inbound repeat buyers minus outbound repeat buyers, as a percentage of total repeat buyers), followed by Gauteng with 14%, the two largest provincial economies. The smaller provinces had the worst rates of outbound migration, with the highest estimated to be Mpumalanga on 33.9% followed by the Northern Cape with 33.1%, which arguably speaks to a lack of economic opportunity in these provinces.
On a net migration basis (repeat buyers entering a province minus those departing) it was only the Western Cape that saw positive or “net inward” migration to the tune of +9.7% of total repeat buying. Next best were Eastern Cape and Gauteng with slight “net outbound” migration rates to the tune of -0.4% and -0.6% respectively.
Clinton Martle, FNB’s Property Leader Strategist, based in Cape Town, says “The Western Cape 2011 net migration performance is very much “more of the same”, with the province having had the best net inward migration for the past decade or more. “This should be a key source of long term support to the province’s economy, providing it with the potential to have superior long term economic growth to most other regions”.
Loos notes, “StatsSA estimates for the 10 years from 2001 to 2010 show the Western Cape was indeed one of the star economic growth performers, only slightly behind the top performing Gauteng, with an average annual real economic growth rate of 3.77%, compared to Gauteng’s 3.91%, making the country’s two major economies the top two growth performers”.
Loos adds, “While Gauteng’s net migration rate of repeat buyers is considerably weaker than the Western Cape, we suspect that it probably has a superior inward migration rate of first time buyers from other regions, made up of younger people starting out on their career paths. We believe this probably to be the case because Gauteng remains by far the largest economic region and thus the one with the greatest economic opportunities.”
What seems clear from the study is that certain of the minor provinces have very significant net outward migration rates, Mpumalanga being the worst at -15.5% of total repeat buyers, suggesting steady skills losses in those provinces. These smaller provinces may therefore find it increasingly difficult to grow their economies and provide jobs in future, given their apparent “skills drain”.
“The results of these findings have implications for the Western Cape region. In order to retain its net inward migration of repeat buyers and attracting skills and financial purchasing power, the province has to find ways to grow in an environmentally friendly way”, notes Martle
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