19 Jan 2007
While the main demand for homes in Mitchells Plain and Khayelitsha in the Cape Flats is still from those relocating within the area, there's an increasing trend towards buyers from outside the area purchasing second homes for investment purposes.
This is reported by Pam Golding Properties, which sees sales of approximately 20-30 units a month in these areas. "This is due to the fact that the average rental income is one percent of the value of the house, ie a R300 000 home will yield R3000 rental per month, which is an attractive option," says Karen Williams, PGP's sales manager based in Mitchells Plain.
She says movement within these areas is for various reasons, such as those upgrading or downsizing and sees these buyers moving from Mandela Park, for example, to Elita Park, or from Tafelsig to Eastridge and then to Westridge or Portlands. Others may move somewhat further afield to areas such as Elsies River and Kuilsriver.
"While the Khayelitsha/Mitchells Plain market is starting to develop, unfortunately bank valuators still value property well under the price the market offers, ie that which willing buyers will pay. Another issue that makes the selling process more complex is that before selling the home, the seller often needs to consult with neighbours through the 'street committee', which manages the dynamics in a specific street or block. In this way the community controls who enters the neighbourhood and as a result, the willing seller cannot just sell to the open market," says Williams.
"On a positive note, more development is visible now, with developers having completed the lengthy process of getting services in place during the past two years. As a result, we are starting to see residential developments springing up in clusters of 100 units, selling at prices ranging from R250 000 - R400 000. Eventually the traditional (or existing) housing market - where homes are in strong demand - will start to catch up with the value of new homes.
"In future we believe that more people will own houses for which they have paid a market related price. They are beginning to have some experience of the positive value effect on their houses if the environment is upgraded and this will lead to an upliftment of the look and feel of areas, with owners demanding council services, and painting and upgrading their homes.
"Another positive factor is that government is moving several departments to Khayelitsha and Mitchells Plain, eg Home Affairs and City Police - an interesting trend whereby the work place is relocated to where people live, and which we anticipate will be on the increase."
Williams says prices in these areas are definitely on the up, with capital appreciation of 20-40 percent achieved over the past four years. In Khayelitsha, Elita Park is in great demand, being perceived as an affluent suburb, as is Pelican Heights in Mitchells Plain, where double storey mansions abound and residents have scenic views of False Bay. Westridge and Portlands in Mitchells Plain are also popular as they are close to schools and transport and perceived as safer communities.
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