BUYER’S MARKET ALONG E CAPE COAST COULD SLOWLY DRIVE PRICES
Lower property prices could mean decent longer-term returns
Due to low property prices in East London and Port Elizabeth, the coastal cities are being seen as worth a buying punt for a long-term investment
East London and Port Elizabeth were recently on the receiving end of a negative compliment from Statistics SA.
Due to the low prices in both EL and PE, the agency signalled the coastal cities as being well worth a buying punt as a longterm investment, with decent, though distant, returns from relatively low investment costs.
“We have seen an uptick in interest over the past few months, with a slight acceleration since the election,” said Sean Coetzee, principal franchise holder of Pam Golding Properties (PGP) East London.
“Certainly people that were contemplating buying have moved from the ‘no real immediate interest’ phase to ‘let’s see what is available’.”
“Despite housing markets around the world experiencing a slowdown in prices, due to challenging economic conditions and political uncertainty, there is still potential and value in investing in property in South Africa, specifically PE and EL,” said Clifford Oosthuizen, managing director of Westbrook, a multi-generational estate in Port Elizabeth.
“This is especially the case when it comes to secure residential estates, which are currently experiencing a boom in our local market.”
Coetzee said EL did not have the high number of estates that are close to the city, as found in PE, but the affordable ones were selling well, and there were a number in the pipeline.
First-time buyers often prefer to invest in new developments because there are no transfer fees payable.
PGP handles the sales at Olivewood, the golf and lifestyle estate 30 minutes from EL on the East Coast, near Chintsa.
“Sales have picked up nicely, and we are getting numerous enquiries, many from up-country people. Potential buyers who holidayed in the coastal villages, east and west of the city, have happy memories of EL, making settling here an attractive option.”
Oosthuizen said he had found that South Africans had become increasingly hesitant to invest in traditional property given the perceived difficulties in selling those homes in a slowing market. “However residential estates provide a strong alternative as they provide investors with significant additional value encompassing security, schools, medical facilities and beautiful environments.”
As with EL, the most sought after price in PE hovers around R1.5m, with demand exceeding supply.
Oosthuizen said Westbrook, as a major developer, has identified this gap, and are targeting buyers who want to downscale to live in lock-up-and-go units, where security is good and there’s less maintenance.
“Estate living is something that has grown in popularity over the past few years. Safety and security are often-cited benefits that have a direct impact on the return on investment these properties generate. Certainly, lifestyle benefits and communal facilities also contribute to the strong sense of community created in these estates,” said Oosthuizen.
When it comes to residential estates, the perks are buying into a development where the actual built home can be viewed and where buyers don’t have to pay interest on the bond before the home is registered in their name, he said.
Despite the uptick in interest, Coetzee said that EL rates and service delivery could torpedo substantial property sales. He was concerned that there is still no clarity on the rates confusion, which has now entered its second year. Unless there is clarity developers will not risk developing, despite demand.
“Service delivery is a very tangible drawback. There are regular reports that the city is one of SA’s dirtiest. The roads are in a poor state. If buyers are slightly hesitant Buffalo City Metro’s non-service reputation will have them looking elsewhere.”