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Western Cape house prices lead the way

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18 Apr 2012

The Western Cape average house price growth increased year-on-year (y/y) to 8.2 percent, leading the way of the major South African regions. 

Pam Golding Properties is selling a one bedroom apartment located in a secure complex on the Bloubergstrand beachfront for R1.15 million.

According to the FNB Q1 2012 Provincial House Prices report, national house price growth reached 8 percent y/y in March.

Gauteng has seen its price growth accelerating for four consecutive quarters to 6.8 percent y/y as at the first quarter of 2012.

Writing in the report, John Loos, FNB property strategist says although not yet the top performing province price growth-wise, Gauteng agents are the most upbeat of all major metro regions regarding their perceptions of residential market strength.

KwaZulu-Natal and the Eastern Cape, two strongly manufacturing-driven economies, appear to lag the trend of the two more services driven economies of Gauteng and the Western Cape by a few quarters, says Loos.

The two major coastal regions have seen their house price growth slowing a little in recent quarters, with the Eastern Cape measuring 5.8 percent growth in the first quarter and KwaZulu-Natal 4.5 percent.

Limpopo, Mpumalanga, North West, Free State and Northern Cape recorded 7.6 percent y/y in Q1 2012.

Loos explains that these regions are diverse, with reports of strong market performances in towns where mining and power generation expansions are happening, for example in Kathu or Lephalale, while agriculture performance has generally been solid in recent years.

An aerial view of the Hermanus Beach Club, which fronts onto the rocky coastline just south of the Hermanus CBD consisting of 238 two and three bedroom apartments and 62 detached and semi-detached villas.

Smaller cities such as Bloemfontein, while not having the same economic growth as some larger metros, didn’t appear to create the same oversupplies as others during the boom years.

Pam Golding Properties (PGP) says upcountry property buyers who once regarded the Cape West Coast as a holiday destination, are now looking to buy retirement homes in the area.

Laurie Wener, PGP managing director for the Western Cape metro region says buyers are purchasing homes along the entire stretch of coastline from the Western Seaboard of Cape Town up to Melkbosstrand, Langebaan and Paternoster.

Wener explains that previously, the West Coast was dominated by the leisure market with upcountry buyers only expressing an interest if they were seeking a holiday home in the area.

Former leisure buyers are starting to look seriously at settling on the West Coast for their retirement years.

Buyers are realising they can acquire excellent value for money and a wonderful coastal lifestyle, while still being within easy reach of major amenities and even an international airport. 

The opening of the West Coast Mall in Vredenburg and the Netcare Blouberg hospital have both been key factors contributing to this shift in mindset, says Wener.

PGP says the demand is coming mainly from cash buyers, looking for homes priced from just under R1 million to around R3.5 million. 

While some are buying for complete retirement, others are opting to semi-retire to the West Coast, taking advantage of modern technology to work from home and commute to Cape Town if they need access to major business facilities and travel. 

This double-storey, four bedroom home on the Royal Alfred Marina in Port Alfred is selling for R3.85 million through Pam Golding Properties.

PGP says buyers in Langebaan came from Gauteng as they were attracted by low crime levels and the traffic-free lifestyle.

Velddrif, incorporating the sought-after marina of Port Owen, where many homes have private jetties is also a popular town with buyers.

Beachfront plots are priced from R1.2 million, two bedroom apartments overlooking the yacht basin are priced under R1.1 million, riverfront plots from R825 000, while houses can range in price from R650 000 to R15 million.

The options for potential West Coast retirees are not limited to small towns – those wanting to live within the urban limits of Cape Town itself also have plenty of choice.

PGP says the Blouberg beachfront is popular with Gauteng retirees who buy two bedroom apartments priced under R2 million.

Secure estates in Royal Ascot, Big Bay, Sunningdale as well as the Atlantic Beach and Sunset Links golf estates are popular with buyers relocating from larger homes in Johannesburg or Pretoria.

Rawson Properties agent, Alta Bester says the Hermanus Beach Club secure development now 12 years old has seen good values over the years.

Those who bought soon after the launch 12 years ago were able to get the smaller apartments for between R160 000 and R180 000. 

Today these apartments sell for between R550 000 and R675 000 (depending on the condition, location and sea views) and the three bedroom units cost anything from R700 000 to R850 000.

One of the main factors enhancing the project’s appeal is that the on-site rental company, Hermanus Beach Rentals, has over the years proved itself to be highly efficient at obtaining and managing profitable shorter leases.

In the Limpopo Province, RE/MAX of Southern Africa, reports that Hoedspruit located in an area known as the Valley of the Olifants has grown from a small and relatively untouched tourism and agriculturally-oriented town to a tourist hotspot with a good selection of accommodation and other small town conveniences

She says a two bedroom apartment will command a daily rental of R600 to R700 and the three bedroom units anything from R850 to R1 000 per day. 

Over holiday periods such as Christmas and Easter these rentals increase and the entire estate will be booked out. 

Units selling at the Beach Club are currently priced between R500 000 to R1 550 000, she says.

Meanwhile, PGP says Eastern Cape locations such as St Francis Bay and Port Alfred remain sought-after as properties are generally pegged at higher price levels than other homes.

The agency says would-be buyers are eyeing homes at the Port Alfred Marina, which offers secure complex living.

PGP notes that the Royal Alfred Marina is seeing a demand among black buyers who are entering the leisure homes market.

The majority are established business people, often from upcountry but also from what was formerly known as the Border/Transkei areas and which now form part of the Eastern Cape.

At St Francis Bay, PGP area principal Richard Arderne says the buyers are locals from the Eastern Cape, about 30 percent are from Gauteng and some from KwaZulu-Natal.

In the Limpopo Province, RE/MAX of Southern Africa reports that Hoedspruit located in an area known as the Valley of the Olifants has grown from a small and relatively untouched tourism and agriculturally-oriented town to a tourist hotspot, with a good selection of accommodation and other small town conveniences.

Annie van den Berg, broker/owner of RE/MAX Wildlife Properties, says the property market continues to show signs of improvement, with investors actively looking to buy homes in the area.

She says that property within wildlife estates has shown the best returns on investment over the past year, with some stands in these estates selling four or five times over.

“Due to the fact that most investors are still holding onto their cash, around 80 percent of properties sold within wildlife estates were bought as permanent residences, while around 20 percent were bought for buy-to-let investments,” says van den Berg.

Jawitz Properties is selling a luxury home for R8.4 million in Ballito Bay, KwaZulu-Natal.

However, she notes that while property buyers within the Hoedspruit region are purchasing homes that need renovation as well as ones that are ready to just move into, the most popular purchase option is the purchasing of vacant land that is currently selling for below market value.

She says because of the good value for money properties currently on the market in Hoedspruit, investors tend to buy multiple cheaper properties rather than one expensive property.

Investors looking for solid yields are said to be snapping up homes in Ballito, in KwaZulu-Natal.

According to Keith Brown, principal at Jawitz Properties Ballito, this north coastal area is the new Cape Town when it comes to property as it offers many business and local economic growth opportunities with King Shaka International Airport playing its part for easy access to KwaZulu-Natal.

Secure estates make up the majority of sales in Ballito as the properties are newer and security and quality of life are priorities.

Construction is booming along the North Coast, as new developments mushroom in Ballito and Salt Rock, he says.

“Demand for buying off-plan in gated-estates is increasing particularly among those who are looking to buy land and build their own homes,” says Brown.

He adds that there is huge demand for homes priced from R700 000 for small apartments to R50 million plus, while affordable homes selling for R1.8 million move fast.- Denise Mhlanga

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