Rental student accommodation close to Rhodes University in Grahamstown is reportedly buoyant and investors are happily cashing in on good returns.

Student flats that are available range from around R380 000 to R850 000, and monthly rentals currently start at around R2000.

With about 3 000 students a year living off-campus, the demand for suitable rental accommodation is growing while demand for homes is not as high.

Steve Birt, managing principal of the Lew Geffen Sotheby’s International Realty franchise in Grahamstown says there are a few new units still unsold at the moment but this is only because the local investor market is saturated.

He says with the start of the new academic year, these will be swiftly taken up.

Family homes for sale in Grahamstown are likely to stay on the market much longer unless the owners urgently adjust their asking prices, he says.

Birt explains that for many years, people just accepted that Grahamstown house prices were high relative to other areas because of a shortage of non-student related development.

Parents who decided to move to Grahamstown because of good schools were prepared to pay a premium and many academics were happy to rent rather than buy because they expected to move after a year or two.

Since the 2009 recession, potential buyers have become increasingly price conscious and extremely resistant to any hint of overpricing.

He says banks will simply not grant loans to buy properties where they don’t see a certain margin for future value growth.

Homes that are well-priced in terms of the Grahamstown market are currently taking five to six months to sell and even then many only achieve around 85 percent of their original asking price.

The best-selling homes in Grahamstown are those priced between R700 000 and R950 000.

Student flats that are available range from around R380 000 to R850 000, and monthly rentals currently start at around R2000.

He adds that property rentals start at around R6 000 per month for a three bedroom house.

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