Smaller Eastern Cape towns such as Despatch and Uitenhage, where properties can still be bought for between R500k and R600k, are luring entry level and investor buyers in droves.

With Absa's national average house price well on the way to topping R1m in 2008, buyers are widening their search areas in pursuit of better bricks-and-mortar value for their money – even if it means commuting further to work and back, says Deon van der Merwe, principal of Acutts Despatch and Uitenhage.

"In the last few months, we have seen a significant increase in first-time buyers from Jeffrey's Bay and Port Elizabeth for whom affordability is the main criteria," he says. In support of this, he cites suburbs such as Azalea Park in Despatch, where standard three bedroom houses with two bathrooms and one garage on a stand measuring just over 600sq m, carry almost unheard-of price tags of around R650k.

Spacious older homes in need of renovation in areas like Bothasrus are on the market for between R550k and R650k, which also represents good value since they generally comprise three bedrooms, two bathrooms, three living areas and a swimming pool on a reasonable size piece of land.

While freestanding houses are moving well in these towns, the real buzz in both is for sectional title developments, which are immensely popular amongst investors and young couples, he says. Not only is the entry level asking price of less than R500k a major draw-card for end-users but growth in rental returns is also appealing enough to entice investors there.

"The current rental income for a two bedroom unit in a sectional title development averages around R3,000 per month, which is not only a substantial increase on last year but looks set to continue escalating as the year progresses," he says.

Examples of this type of pricing are to be found at Martin Villas, a new sectional title development where units are selling for R499k. Measuring 79 sq m, all eight units offer two bedrooms, two bathrooms, an open-plan kitchen with cherry wood finishes and a shaded carport. An additional benefit is their setting, in a fully walled estate with 24 hour security and remote control access.

Van der Merwe says most interest in this complex is from first-time buyers from Port Elizabeth who are taking advantage of being near major access routes and prepared to drive 25 minutes to the centre of Port Elizabeth and back each day.

Predicting steady growth in the price of residential property on the back of a 20 percent increase in commercial property prices in Uitenhage over the last 12 months, Van der Merwe says the Koega Development has had a positive spin-off on the commercial expansion in Uitenhage. This, he adds, has buoyed the residential market which is also benefiting from an influx of buyers from the Western Cape and Free State who are relocating to the area for business reasons.

For buyers with more than R1m to spend on a home, Uitenhage's upmarket Vanes suburb offers executive houses comprising four bedrooms, two bathrooms, three living rooms and swimming pool. However, he says, the main price movement in the next year will be in the entry-level segment of the market and specifically in sectional title developments.

For more information contact (041) 933 6740 or send an email.

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