An increase in the migration of residents from the big metropolitan areas to the Southern Cape and the Garden Route is leading to extraordinary growth in the region.
Not only did the region experience above average annual economic growth during the last five years, but its residential market also outperformed its national counterpart in 2008's first quarter. This information flows from a special investigation by First National Bank (FNB) which indicated that half of the estate agents in the Garden Route noticed an increase in migration in the first quarter.
The region's most alluring attractions are its natural beauty and the superb lifestyle it offers.
Lynette Nicholson, head of research at FNB's home loans division, says although the region's residential market did not escape the national deceleration in house price growth, it did perform better. "Approximately 72% of the properties in the Garden Route region sold for less than the asking price. The national figure was 83%."
John Loos, property analyst at FNB's home loans division, describes property in George as the main growth driver and although its property market's volume levels dropped by 38% year-on-year (y/y), a steady house price growth of 27% y/y was reached in 2008's first quarter. The current average house price in George is R1,03m.
However, Knysna and Plettenberg Bay showed a weaker performance, he says. Volume levels dropped by 41% in Knysna and house prices dropped by 27% y/y. Volumes dropped by 21% in Plettenberg Bay, but house price growth was 3% y/y.
He says George and its surrounding areas can develop into the fastest growing economic region in SA.
"Although the Western Cape and Gauteng economies grew by 5% per year over the last five years, Globalinsight indicated that the economy of the Eden region, which includes Heidelberg, Riversdale, Mosselbaai, George, Oudtshoorn and Knysna, grew at an average of more than 9% between 2003 and 2007."
This means that the Garden Route and the Southern Cape are one of the most promising regions for residential property and that its rapidly growing economy is creating large numbers of work opportunities and bolstering buying power.
Nicholson says the greatest challenge the region faces is that the rapid growth can double the size of its economy in less than a decade. "The authorities have to plan developments carefully in order for the region's lifestyle draw card to be retained." – Elma Kloppers, Sake24
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